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RIGHT AND RICHES 



BY 



CHARLES O. McCASLAND. 



Being a Scientific Study of Weai^th and its Rei^ations to 

Producer, Consumer and Society; The Cause of Want 

AND its Amei^ioration; The Nature and Laws of 

Money and the Dangers of Our Centrai^ized 

System of Banking and Corporation 

CoNTROi,; the Ei^ements of 

Coi^iyECTivE Prosperity 

and individual, 

Success. 



THE WILBUR PUBLISHING COMPANY, 
Pasadena, Cal. 



<\^ 






7mJh of GONG?iHil 
JUN 1 1908 

\rhufLf f^cg\ 



Copyright, 1908, by Charles O. McCasland. 
All rights reserved. 



3^ 



TO THOSE WHO, 

BY VOICE OR PEN, BY PRECEPT OR EXAMPLE, 

ARE STRIVING TO INCULCATE 

IN HUMANITY 

THE APPREHENSION OF TRUTH. 

Pasadena, February, 1908. 



CONTENTS. 



INTRODUCTION. 

PAG^ 
Introduction 5 

PART 11. 

property. 
chapte:r 

I — Ownership — Its Justification Under Different 

Conditions, the Main Inquiry of Economics. . 15 

II — Business — What is Its Rightful Purpose? 19 

III — Value — Its Primary Manifestation. The Wide 

Divergence of Its Three Phases 24 

IV — Property Essence — Property's Commercial Being 

Consists in Exchange Value 33 

V — Property Evolution — Is from the Power to Hinder 

Use 39 

VI — Property Precepts — Brief Statements of the Laws 

of Property 42 

PART III. 

PRODUCTION. 

I — What Production Comprehends — Human Efforts 

but not Natural Forces 47 

II — Exchange and Art — Art, Division of Labor, 

Commerce 49 

III — Labor and Wages — Labor not Synonymous with 
Toil. Education Makes Effective, but Does 

not Merit Increased Wages 56 

IV — Wealth — How Important to Define 66 

V — Capital, Increase and Interest — What is Not Capi- 
tal. Interest but Part of Increase. Loaned 
and directly Applied Capital 69 



PART IV. 

SHARING OF OUTPUT. 
CHAPT:eR 

PAGE 

I — Concession — The Reason for a New Term. The 

Third and Greatest Taker of Output 83 

II — "Living" Rates of Interest and Wages 92 

III — The Eminent Domain of Greatest Efficiency 112 

IV— The Consumer's Rights 128 

V— The Producer's Rights 137 

VI— Society's Rights 157 



PART V. 

re:ci.amation. 

PAGE^ 

I — PaternaHsm — In Which Natural PaternaHsm is 

OutHned 167 

II — Title Limitation — Limitation in Degree and Dura- 
tion 171 

III — Units, Monopolies, Public Ownership — As Civili- 
zation Unifies Mankind, and Unitizes the 
Lines of Production 175 

IV — Title and Time — The Limiting of Ownership to 

the Living 193 

V — Taxation and Compensation — No Taxes Just Ex- 
cept for a Consideration 207 

VI — Quantitive Title Restriction — Has One a Right to 

Own the Whole Earth? 217 



PART VI. 

FINANCES. 
CHAPTER PAGE 

I — Value-Poise — The Equilibrium of Competitive 

Values of Commodities 325 

II — Currency and Money — The Vital Distinction Be- 
tween Currency and Money. Currency a 
Medium of Exchange — Money a Payer of 
Debts 232 

III — Credit — Should be Distinguished From Credence 

and Confidence 255 

IV — Banks and Panics 264 

a — The Recent Panic — Its Cause? Lack of 

Capital? Lack of Currency? 264 

b — Demand for and Supply of Capital. The 
Nature of Capital Generally Misunder- 
stood 279 

c — Dilation of Concession. How the Great 
Stock-jobbers Exhaust the Wealth of 
the Land 284 

- d— The Part the Banks Play— The Banks 

Hold, While the Stock-jobber Milks. ... 290 

e — Banking Laws — The Almost Criminal 
Ignorance of the General Public of the 
Substance of these Vital Laws which 
are so Easy of Access 292 

f — The Remedies — To Cut Down Banks' 
Debt-Making Powers, and Make Them 
Maintain Actual Reserve 301 

V — The Importance of Industrial Corporations — 
Their Integrity the Foundation of Industrial 
Stability 305 

PART VII. 

PROPER USE AND PLENTEOUS SUPPLY. 

I— Waste and Want 313 

II — Governmental Reform and Individual Opportunity 332 



''For the ultimate notion of right is that which 
tends to the universal good; and when one's acting in a 
certain manner has this tendency he has a right thus 
to act,'' — Francis Hutcheson. 



"Neither shalt thou covet thy neighhor^s house, his 
field, or anything that is thy neighbor's." 



''Seek not proud wealth; hut such as thou mayest get 
justly, use soberly, distribute cheerfully." — Bacon. 




The Author's Purpose. 

OVERTY is a disease, a wide-spread, contagious 
disease. It is a form of starvation. Now, starva- 
tion does not always mean a lack of a sufficient 
food supply, but often simply a malnutrition or 
failure of assimilation. Is the wide-spread suffering from 
poverty, which appears to-day, due to a lack of abundant 
supply or to non-assimilation? 

Economic writers quite generally hold that, collectively, 
the supply is sufficient if properly diffused among the in- 
dividuals, and their efforts are principally directed to the 
evolution of a sociologic system which shall give the proper 
distribution. This they hope to see accomplished by the re- 
form of industrial laws; but the fact that they overlook is 
that poverty is a condition of the individual. It is not 
enough that measures be taken to prevent the spread of a 
fever; it is even more important that a remedy be offered 
the individual; for we may have a healthy community, just 
as we may have a moral community, only through the health 
or morality of the individual; and to these ends legislation 
is not an effectual cause, but only an encouragement. 

The cure of poverty can only be wrought out through 
scientific understanding. In recent years every progressive 
concern, producing a certain line of materials, is coming to 
have chemists expert in the analysis thereof; and this has 
resulted in the greatest advance in such industries. Now 
the remedy for poverty is plenty and its proper application 
to the individual need; therefore, to banish or ameliorate 
the suffering from poverty, we require a scientific analysis 
or understanding both of wealth and individual need. I 
have herein attempted such analysis. 



2 THE AUTHOR'S PURPOSE. 

While I do not presume to have developed this reasoning 
into a finished science, I hope to have made some progress ; 
for however much I may fall short of the purpose in the 
treatise hereby presented, I have at least definitely de- 
termined that when the pure science of economics is ap- 
prehended, it will afford the individual a sure means of 
success and present abundance; and ultimately it will bring 
about perfect social conditions of plenty and peace. Any 
economic teaching which does not present to the individual 
a sure recipe for such success is lacking in its science. 

In the hope that in some small measure at least the effort 
to improve social conditions may be promoted, and that even 
a few of tired humanity may be helped to a solution of their 
problems, this volume is submitted. 

Charlks O. McCasIvAnd. 



PART ONE 



Introduction. 

The Widespread Evil — Want. 




Introduction. 

"7 am come that they might have life, and that they 
might have it more ahundantly:' — John x:10. 

I HE multitudes of mankind pass the greater part of 
their waking hours struggHng to get the bare 
necessities of Hfe — food, shelter and clothing — 
with now and then a mere trifle of luxury. 

Why is it such a task to live? 

No farmer would keep a species of stock that would no 
more than earn its feed. No manufacturer would keep an 
engine that would no more than run itself. Is man alone 
unprofitable? Is he lor no use but to feed himself? Sure- 
ly life is for more than mere subsistence. 

Nor is it the poor alone whose time is so engrossed. 
Many of the minority who have secured command of a 
competence for many years, or even for life, are slaves to 
the habit of gathering more and to the fear of losing what 
they have. They, too, go on with the grind of getting 
wealth, never taking time to live and do good. 

A certain farmer made a practice of producing and sell- 
ing clover seed, whose only use is to be sown. His little 
child was asked by another child, "What is clover for?" 
'Why, to raise seed, of course !" 

Quite as lacking in understanding is the common state- 
ment that immigrants are needed to promote the real estate 
interests of a place, or that the proper business of women 
is to keep house and raise children. Indeed, the highest 
business of both men and women is to raise mankind — 
themselves included— to their natural estate. Epictetus says 
the beasts were made to bear burdens, but man was made 
to express God. 



6 RIGHT AND RICHES 

The Great Cause who authorizes our being provides 
continuous profusion for our needs. Is there not abundant 
food supply as well as the materials for fabrication of 
wares? For fuel great forests ever ready to renew them- 
selves. Strata of coal unmeasured are accessible to man; 
oil is ready to spout high into the air ; the great cry we hear 
is for a market. Armies are sent out to fight and die con- 
quering a market where goods may be shipped. Yet how 
many at home are hungry and cold and shabby? 

When some, by progressive thought, with improved 
machine or process have made possible a profusion where 
previously there had been but meagre supply, lovers of hu- 
manity have hoped that, with repeated discovery, all might 
share in the good things of life. Yet art after art has been 
revolutionized and still, with ships and cars of multiplying 
capacity, loaded with wares of finer and finer make, millions 
are suffering for the plainest wants. The following, from 
''Social Unrest," by John Graham Brooks, instances some 
of these processes : 

"The cheapness and abundance of grain foods is explained 
when the story of machinery has been told. The steam-going 
plow, combined with a seeder and a harrow, has reduced the 
tirne required for human labor (in plowing, sowing and harrow- 
ing) to produce a bushel of wheat from an average of 32.8 
minutes in 1839 to 2.2 minutes at the present time. It has re- 
duced the time of animal labor per bushel from 57 to lYz 
minutes; at the same time it has reduced the cost of human 
and animal labor in plowing, seeding and harrowing per bushel 
of wheat from 4 cents to 1 cent. 

"Before Whitney's invention it required the work of one 
person 10 hours to take the seed from one and a half pounds 
of cotton. The machine will now do in the same 10 hours more 
than 4000 times as much. That 10,000,000 bales can be marketed 
in a season and that cloth is so cheap is no longer a wonder. 

"A linen sheet that once cost 30 days' labor can now be 
made in seven hours. A steam shovel will do in eight minutes 
what one man can do with difficulty in 10 hours. The dirt 
may be unloaded from a train of cars in six minutes that would 



INTRODUCTION 7 

require with a shovel a day's work of 10 men. A stone crusher 
will perform the work of 600 men. 

"Few material blessings bring more comfort to every class 
in the community than good roads. To none is the advantage 
greater than to large sections of the relatively poor, as in 
country districts. Yet the rapid growth of these highways is 
almost exclusively the result of the machine. Yet with all this 
multiplication of output thousands die for want of proper food 
and shelter." 

It cannot be denied that a larger percentage of people 
have acquired and are still acquiring a reasonable amount of 
useful things; but the millions suffer, though in some de- 
gree less. The misery in the tenement slums of the great 
cities is not less than that of, perhaps, the majority in the 
average rural districts; although it is common for certain 
writers and speakers to represent all outside of cities as 
blossom and sunshine. Still there is improvement. 

Notwithstanding the evidence of greed among the most 
wealthy, benevolence and charity are muhiplying. The city 
stricken by storm or catastrophe finds prompt and abund- 
ant relief. Institutions of benevolence find readier sup- 
port, education is freer each year. Chattel slavery has been 
almost everywhere abolished. Apprenticing of children by 
articles, equal to enslavement, to learn trades, has been 
largely abandoned. Many worthy laws have been enacted 
and cruel ones repealed. Child labor is being abolished in 
many States. Contracting of service for a period of time has 
been abolished pretty generally. But as one means of de- 
spoiling the many by the few is done away with, another is 
invented. The greatest legal managiiig skill is, of course, 
employed by the greatest wealth. 

What is needed, to bring the results of genius and in- 
tellectual progress to the uses of the masses, is education of 
the masses to broader outlook and nobler purpose. It is es- 
sential to arouse a desire for better things among them. 
They must come to think and know that such things are for 
them and may by proper effort be had by them. It is lack 



8 RIGHT AND RICHES 

of intelligent plan for Society more than criminal intent of 
individuals that causes the trouble. Sir Oliver Lodge, in 
his address to the Social and Political League, asks : 'Ts it 
possible to reconstruct society on a scientific basis ?" 

The custom of allowing absolute ownership of land, he 
held, was responsible for many social evils, and to him it 
was a most extraordinary and amazing thing that any man 
had the right to sell a piece of England. 

The law of inheritance, he likewise held, would also have 
to be considered. The idea that people might live without 
working, and yet without disgrace, was responsible for 
much incompetence and some misery. 

"All should have leisure," he writes, "but none should 
be completely idle, save on pain of starvation or the dis- 
ciplinary drill of prison." 

From mere generalities. Sir Oliver passed to specific con- 
structive reform, and expressed the opinion that the work- 
houses and jails should become manufactories for human 
beings. "Paupers," said Sir Oliver, "must be shown how to 
live, how to work, how to develop their faculties." 

There are certain natural laws underlying business 
which should be taught to the children as well as adults un- 
til universally understood. One man working with his axe 
in the free woods can easily understand the quantity of 
property he is developing. But industries, run by hundreds 
of heads and thousands of hands, whose materials are 
brought from every quarter, and whose product is sent to 
the furthest parts of the globe, cannot be so easily under- 
stood. Such an enterprise requires intricate systems of 
bookkeeping and tabulating to properly be comprehended. 
It is only recently that proper system in accounts has been 
appreciated even by these greater concerns, but its effects 
have been astonishing. 

So the increased complexity of our social system re- 
quires, and in a measure is beginning to receive, the help of 



INTRODUCTION 9 

scientific treatment and analysis. Our Federal Government 
is rapidly spreading the benefits of science. The next great 
step should be to replace the lawyer majority in legislative 
bodies with practical men of affairs-^merchants, teachers, 
mechanics, engineers, women — persons whose thought is 
forward, progressive, effective, free from tradition and 
musty precedent. We should take a lesson from the great 
corporations and employ captains of thought and accomp- 
lishment to do our legislating instead of those whose train- 
ing has been to obstruct and delay. 

All should enjoy the blessings of science and progress, 
preference being given to those who cause good things to 
be, and in the degree that they know their highest use. 

Why does our Government have schools for the training 
of soldiers and marines and none for statesmen and econ- 
omists ? Says George C. Lorimer in "The World To-day :" 

"It is not uncommon for the existence of the slum to be 
attributed to the viciousness of its denizens, as though that 
were the sole cause of its origin. The police and the church, 
with equal frequency, are held responsible for its continuance. 
Poor human nature, I admit, cannot be exonerated from all 
blame; and municipal and ecclesiastical authorities presumably 
might do better work. The more I reflect, however, on the 
problem, the more I am convinced that the root of the evil is 
rather economical than civic or religious. So long as industrial 
methods are what they are, so long as the blundering or the self- 
ishness of modern trade methods, and the stupidity of the 
recklessness of politicians continue to render it possible for a 
few men to own most of a nation's wealth, and increasingly 
difficult for the masses to make a decent support; so long as 
the land is burdened with such a curse as the saloon, which 
wastes, not only wealth, but the source of wealth, the produc- 
tive energy of manhood, so long the slum will flourish, to 
plague and disgrace its abettors. Christianity and philanthropy 
are engaged at present in a hopeless task. They may do some- 
thing — much. It is foolish, however, to expect them to succeed 
as long as the industrial system is what it is, ruled by a mis- 
leading idea and enforcing unscientific principles. If the slum 
is to be suppressed more attention must be given to economics." 



10 RIGHT AND RICHES 

But where shall we find the vital, effectual, and infallible 
principles of economics, both for individual and State, save 
in the teachings of Christianity? When we read these 
teachings, let us take them at what they say. Let us con- 
sult our lexicons as to the meaning of the words we read, 
and not tradition. 

Business is subject to scientific analysis. That is true 
as well of public as of private business. But what is counted 
"good business" is often no business at all, and what is 
called law is often but the authorization of outlawry and 
plunder. 

The basic principle of true business and true govern- 
ment is the golden rule. 

Someone has said: "We are learning that the Golden 
Rule and the law of self-preservation run parallel. Applied 
to commercialism, the Golden Rule is to make money so as 
to give a benefit also to him from whom you make it; and 
that, too, is common sense." 

The great trouble is our reluctance to accept what is new. 
We cling to old laws and precedent until some cataclysm of 
suffering, sentiment, or bloodshed arouses us. We sit by 
idly and see some person or corporation quietly get posses- 
sion of all the coal, oil, lumber, borax, or other necessity, 
and never stir — unless perhaps to selfishly try to corner a 
little, too — when if we were wise and brave and honest, we 
should rise up and sound the alarm, that the peoples' birth- 
right is being taken. When appealed to, let us not like Cain 
reply : "Am I my brother's keeper ?" 

But we are told such things are legal, they always were 
so. True ; but do you not also know that formerly we were 
ruled by autocrats and tyrants, as in Russia, and that we in- 
herited the laws and spirit of such savage ages. This is a 
thinking age. In former days oxen, or women, drew the 
loads and the fickle wind was depended upon to move ships. 
Now we use science to do such things by a better and surer 



INTRODUCTION 11 

way. We do not in mechanics and industry look to the dark 
ages for a precedent. Why should we in law ? If a thing 
is wrong in society, we should know that there is a scientific 
remedy. 

The scientific basis of all true society is Justice. Ac- 
quirement of property should be only equivalent to what is 
given in return. "For Value Received" should be the test 
of title. 

When one has millions of wealth, the question should be, 
what return did he give to those who conferred it upon him? 
What reward did the public receive? None? What legis- 
lation sanctioned such acquirement? Let it be at once re- 
pealed. 

Honor to those who master the secrets of nature, who 
through invention, organization and system wrest from na- 
ture abundance, where she has given sparingly. But down 
with those systems which reach out and take not alone the 
apples and grapes, but the trees and vines. Let us endeavor 
to find some of the principles of acquiring and creating 
wealth. 

Complaint is made that economic science is not practi- 
cal. The same is said of Christianity. Both are practical 
in so far as scientifically understood. 

The vital force of Christianity and of economics is Love. 
Combination based on greed is a base counterfeit of co- 
operation based on love. Greed combinations heap up 
freight, but seldom is it true wealth ; often it is a burden to 
its owner. Love's wealth is like a flowing stream dififusing 
life. 

In the following chapters I shall endeavor to present 
some of the underlying principles of economics in such a 
manner that they may be apprehended by the beginner, and 
at the same time to maintain that accuracy of statement so 
essential to any permanent place in science. In the light of 
such principles we shall seek remedies for the blighting 
evils detailed in the foregoing pages. 



12 RIGHT AND RICHES 

The common conception of economics is from an in- 
verted viewpoint. All the more vital propositions are seen 
upside down. For example, it is commonly thought to be 
desirable to have a given commodity dear by having it 
scarce, when the natural, the little-child view, is to main- 
tain a bountiful supply of everything so that everyone may 
have plenty with the smallest effort. Happily, our prevail- 
ing business practices are better than our precepts. The 
apprehension of this true, scientific view will give plenty. 
He who shall succeed in disclosing to humanity this true 
focus of economic principles shall furnish the efficient rem- 
edy for poverty and distress. My first effort will be to point 
out some of the errors of our present methods, for the per- 
ception of errors should indicate the nature of the opposite 
truth. I shall not tire the reader with the refutation of the 
mistakes of other teachers, but shall depend solely on the 
correctness of the principles herein presented. 

There has been but one unerring Economist — ''He who 
taught as one having authority." We may without fear, 
therefore, take as our postulates those ever-living truths 
spoken by Him; they are for the daily affairs of men, and 
we do no violence to their more transcendent meaning by 
such use. This is His mission as stated in His own words : 
"I am come that they might have life and that they might 
have it more abundantly." The absolute principle of eco- 
nomics is embraced in His thesis: "Seek first the Kingdom 
of God and His righteousness, and all these things shall be 
added unto vou." 



PART TWO, 



Property, 



Chapter I. Owni:rship. 

" II. Business. 

III. Value. 

IV. Prope:rty Essi^nce:. 

" V. Propi:rty EvoIvUTion. 

" VI. Property Precepts. 




CHAPTER I. 

OwN:eRSHiP. 

IHE desires of humanity constitute one radical 
distinction from other animals. The beast has 
need of food and drink, and certain species 
require other provisions. But the desires of man 
are without bounds. They increase with knowledge of the 
world of art and commerce. The savage wants a wigwam, 
a bow and arrow, a canoe. The devotee of luxury spends 
millions on a home— on summer houses and winter houses, 
private cars, yachts. There is no limit to such fancies. Ma- 
terial desire seeks not alone what is good, but what is useless 
and even harmful. It is prompted by the baser, as well as 
the higher motives. 

Whatever things are desired may be termed Desidera- 

tives. 

Riches depend as much on a knowledge of right use as 
of right production. The world is rich in treasures of good 
things which the Creator has provided for mankind. They 
are for all and there is no lack. Abundance of fuel exists 
in forest, mine and oil well; food in field and water; fabrics 
supplied from animal, plant, and insect. No reasonable 
use can diminish this abundance; yet how many lack for 
things which seem so essential. 

One sees things all about him which he lacks. He sees 
fruit on a tree which he would eat, but is stopped by one 
who says "That is mine." 

"If to the city sped, what waits him there, 
To see profusion that he must not share." 

Merchandise is displayed so as to appeal to his desires. 
He may lack even bread to sustain Ufe. There was a news 

15 



16 RIGHT AND RICHES 

item not long ago of a man being arrested for taking bread 
for a hungry, sick wife. Why should he not take the bread 
which he so much needed? Because it was owned by an- 
other person. 

What is the meaning of ownership? 

Ownership is the power to use and to hinder others from 
using anything. 

In order for a thing to be property it must be subject 
to control. The owner must be able to prevent others hav- 
ing free use of it. 

Some kinds of desideratives are not entirely subject to 
control in a commercial sense. There is no means of hind- 
ering people from having air to breathe so that they will pay 
for it by the gallon. There is no way of putting a fence 
about ocean and mountains to wholly prevent people from 
seeing them without paying admission. Many indeed do 
suffer from lack of air, and the most available views of 
mountains and sea are monopolized; still there remains 
much that is very desirable and yet free. 

The foundation of property is Hindrance. The power 
to hinder others from using makes it "proper," or, peculiar 
to us, makes the title to it. That is why ownership means 
the power to prevent others using. If every one could at 
pleasure ride my horse, where would my ownership be? 

How is ownership instituted? 

Ownership is instituted when one gets the power to 
hinder the use of anything. What constitutes this power? 
It may come from superior muscular or other fighting abil- 
ity, from the control of some organization, from custom, re- 
ligious or other sentiment, or from Legislative enactment. 
Oppressive Hindrance depends upon the ignorance, fear or 
greed of those hindered. 

What is Property? 

Any desirable thing subject to the hindrance of an owner 
is property. 



OWNERSHIP 1^ 

What is the most common basis of ownership in civilized 
communities ? 

Legislation. Civil law. 

What is Law ? 

Law is the enactment of a Government. Government is 
an organization presumed to represent the majority of the 
people and whose decrees are recognized and thereby made 
operative. 

In crude civiHzation, the strong and athletic swooped 
down on the weak and took what they had procured with 
their toil, and by sheer muscular force appropriated it and 
hindered others from using. Not alone did these powerful 
persons take the provisions of the weaker, but they formed 
themselves into the government of their community, the 
chief as king, his aides as barons, and took the substance of 
their own people, generation after generation. 

The invention of gunpowder lessened the value of mus- 
cular strength in this game of appropriation, for the little 
Jap can outshoot the giant Russian. The power of the 
press is fast displacing gunpowder, but not less do the 
holders of power take to themselves the desirable things. 
The press is supported by the property-owning class. ^ Mus- 
cular force has given way to law, but with no more justice. 
Law now gives title. Many writers attribute title to produc- 
tion, but the error leads them into chaos. 

Title to property in all the earth rests on arbitrary law. 
And law is in a large measure made .by the property holders, 
yet it depends upon acceptance by the masses. Until re- 
cently, only owners of real estate were allowed to vote. Law 
must of sheer necessity make some concessions to those, 
who by care or art, make things useful. 

Property is from the word ''proper" as used in the 
phrase 'Troper noun." It consists in an enjoyment or con- 
trol of anything ''proper" or particular to some person or 
company of persons. 



18 RIGHT AND RICHES 

The word "proper" is thus used to indicate the condition 
of something being particular or ''proper" to one's self; has 
precisely the same meaning as selfish. "Property interests" 
has identically the same meaning as selfish interests. 

Property starts from, and forever depends upon selfish- 
ness, hence property in goods is antagonistic to benevolence, 
to that benign use of goods and service which blesses all. 

The strict and persistent insistence on property claims, 
we term churlishness, miserliness, which amounts almost to 
covetousness, a violation of one of the ten commandments. 

"All men are born free and equal." This equal right 
is natural, reasonable and incontestable. Why then does 
government, which claims to represent society — mankind in 
common — give individuals the power to hinder the use of 
things ? This is the main inquiry of economics. 




CHAPTER 11. 

Business. 

USINESS is regarded as the effort to acquire 
ownership of property. Private ownership is es- 
sential in the present status of civihzation, but the 
present rules of its apportionment and control are 
the causes of the greatest suffering. '^Common" or com- 
munistic ownership of all property is possibly only through 
infinite improvement. 

An owner of property may be one person, or a company 
of persons, or an association. A community may own cer- 
tain ''property' for the common good of all its citizens, such 
as schools, parks, water and light supplies, but this is a mis- 
use of the word property, for ''property" refers not to use 
but hindrance of use. Public ownership is being advo- 
cated along many lines and promises great benefits. 

What is the basic statement of all justice and equity? 
It is that all desirable things PRIMARILY BELONG to 
society. 

What is meant by society? 

Society consists of the people in a community at any 
given time. The living generation. Most persons do a 
service to society which is a just compensation for a meas- 
ure of ownership. 

What generation had, or has, the right of disposal, or 
the right to give title to property ? 

No generation has any just power to bind posterity to 
any grant or disposal of title. 

Bach generation has a right to a "new deal ;" has a right 
to declare any title void, where a full consideration is not 
reserved for all its members; even the savage Maoris saw 
this. 

19 



20 RIGHT AND RICHES 

Upon what does the right to subsistence depend? 

Upon being a member of the human race. We do not 
have to earn the right to hve. It does not rest upon labor 
or trade, professional or business ability, but upon being a 
child of the One Father. It is an inalienable, God-given 
claim, which all have upon the abundance of the earth. In- 
fancy, helplessness or lack of acquisitiveness does not vitiate 
this claim, though such inability may lessen our obligations 
to society. Each of us is under a moral obligation to create 
an equivalent to replenish the general fund from which we 
partake. ''To every one according to his need, from every 
one according to his ability" is a trite statement of the 
natural social status. 

By what perversion of logic do we justify enormous ac- 
quisition of property by fox-like cunning? Shrewdness can 
give no claim for wealth nor dullness any reason for des- 
titution. 

In the old school reader we had the dialogue about 
knowledge being power, but that power was not always a 
good thing. Perhaps the native intellect of our great money 
kings rightly directed would be of the greatest good to so- 
ciety. Perhaps it is largely the result of our ridiculous in- 
dustrial system that their intellectual powers are perverted. 

Business is beginning to be properly regarded by many 
as a service to mankind, and not solely a selfish pursuit. 

Elbert Hubbard says: 

"Inasmuch as business supplies the necessities of life, it is 
impossible to have a highly evolved and noble race except where 
there is a science of business. 

"Business is human service. Therefore business is essentially 
a divine calling. 

"The world can only be redeemed through business; for 
business means betterment, and no business can now succeed 
that does not add to human happiness. 

"That many wrongs and inequalities exist in business is 
very true; but they must and can be righted without smashing 



BUSINESS 31 

the business fabric. Just here are required men with great in- 
sight, patience, poise, and love of kind. 

"In all of the great cities are stores that are radiating cen- 
ters of beauty, education, and industry, where the welfare of 
employes and the public is carefully considered by men of 
power. 

"The word "education" sometimes stands for idleness, but 
business always means work, effort, industry. It means intelli- 
gent, thoughtful, reasonable, and wise busyness — helping your- 
self by helping others. Only the busy person is happy. 
Systematic, daily, useful work is man's greatest blessing." 

Traditional Conci:ptions. 

Property is held in too sacred esteem generally, and es- 
pecially in America, considering the sentimental theories we 
hold. Law and order are indeed to be desired and are the 
most speedy and direct routes to justice and. equity. "Let 
all things be done decently and in order," but let us never 
cease to condemn property which rests on injustice and 
partiality. Little title to property rests on justice; let us 
not, then, be too squeamish about restoring it by legal 
means to society. 

It has been discouraging for years to see the decisions 
of the courts, when questions have arisen between the rights 
and needs of the whole people and the traditional claims of 
aggregated riches, given in favor of these traditional claims. 
Is it not sad to see destitution, suffering and helplessness, to 
see industry and honesty thrust aside to make way for 
greed and oppression, with no other justification than 
academic technicality? 

A stronger expression of this cannot be made than to 
quote Prof. John D. Lawson, dean of the law department of 
the University of Missouri. 

Prof. Lawson declared that legal quibbles had made a 
mockery of justice in the United States : 

"If a man is tried for murder the indictment against him 
must set forth, under our laws, how the crime was committed, 



22 RIGHT AND RICHES 

by what means, the exact hour of the day or night and a wealth 
of other details that belong purely to the trial of the case. 

"Because some unimportant statement in the text of that 
charge is slightly inaccurate, the entire case may be reversed 
and remanded for new trial. 

"Original justice is now a contest, not a trial. 

"It has developed into a sort of game of sport, with the 
Judge as umpire. What do verdicts amount to if the criminals 
have money to take an appeal? 

"I know of one case thrown out of court because the word 
"first" had been spelled "fust" in the information; in another 
the word "breast" was spelled without an "a," and in still 
another the information failed to state the caliber of a revolver. 

"Some of these reasons for reversal were so ludicrous that 
they read like the efforts of Mark Twain or other professional 
funny men. 

"Our present methods were copied from the statutes pre- 
vailing under the Georges, the Stewarts and the Tudors. They 
were intended in England to protect the accused from the 
tyranny of the courts. 

"What we need is a commission to investigate the laws 
and their methods of enforcement. I believe this reform is 
coming." 

The erroneous notions of those without property re- 
garding its awful sacredness are even worse than the ideas 
of the ver}^ rich. No one can by any means acquire any ab- 
solute right to the disposal of property. At best, ownership 
is only empirical. The declaration of President Roosevelt, 
regarding the trumped up claims to water needed to supply 
one of our cities, has the right ring. He said : "The rights 
of a great city to a supply of water transcend the supposed 
rights of any corporation." 

That conception of business is modifying, which re- 
gards it as a game having certain arbitrary rules estab- 
lished; and as being perfectly proper, as long as played ac- 
cording to such rules, without regard to the awful results 
of the unlucky. Such is the popular political shibboleth. 

The average merchant seems to care little how much ex- 
cess the consumer must pay, provided he has as low rates 



BUSINESS 23 

as another so that he may compete. One bank wants all the 
privileges , another may get and one railroad those equal 
with the rest; but the newer and wiser view seeks not 
alone equality amongst those playing the game, but the best 
interest of those outside. 

Business may be interesting as a game. The greatest 
skill may be displayed in it. It is indeed the greatest of all 
dramas. But this should not be its purpose. Looked at 
from the standpoint of the common interest it is solely to 
supply service and comforts to humanity — to serve human- 
ity. 

Whatever is inconsistent with this purpose is bad busi- 
ness. Whoever is engaged in a business which does not 
procure him profit, by contributing to the sum total of hap- 
piness and service, should quit or modify it. Who takes 
without giving is a parasite. To paraphrase the words of 
the great Teacher: He who would be chief among business 
men let him give the greatest service. 




CHAPTER III. 
VaIvUe:. 

ALUE seems a very simple thing until we begin to 
examine it more closely. It is primarily mani- 
fested in endurance. 

Endurance is of two kinds ; the first is nega- 
tive or passive and is manifested in the discomfort, or suf- 
fering incident to lack of things or service. The second is 
positive or active and is occasioned by the effort to supply 
the lack. Hence, the discomfort of the labor which will be 
endured for anything indicates to some extent the laborer's 
estimate of its value. But the urgency of his lack may far 
exceed the direst efforts of his labor. 

Lack is not only occasioned by inability to procure, but 
by parting with the needed thing for some consideration, 
some other thing, or through the consideration of love or 
charity. 

Value, starting from this basis of endurance, assumes 
three distinct phases, viz. : Utility, Exchange Value and 
Lack Value. Utility is that physical characteristic of a 
thing which enables it to satisfy desire through one or more 
means. For example, leather has utility for the making of 
shoes, or harness, the binding of books, upholstering of fur- 
niture, the making of parchment, etc. Each of the metals 
have innumerable uses; wood is good to make structures, 
for fuel, to make paper, and so on. 

Utility is an inherent quality or capacity of things to be 
put to use. The utility of a thing is a physical property of 
it. It does not depend on anyone's opinion or condition. 

These phases of value may be illustrated by the phases 
of distance. Individual lack compares with the conception 
of nearness to our person, home, or headquarters. One 

24 



VALUE 25 

says, "my present employment is nearer," or "we have the 
church or school near," "the city is near," "the store is 
handy," a place is "foreign," and so on. In the same sense 
one says, "I need shoes, or bread, I need forty bushels of 
lime or twenty yards of carpet." 

Utility compares with length, distance, irrespective of 
persons. We say, "The lake is ten miles long," "the train 
is half a mile long," "the railroad is three hundred miles 
long." There is no reference to the location of either end 
of the distance. In the same way in expressing utility we 
say that certain beets are so much per cent, sugar, or that oil 
is of a certain gravity, or coal will produce so many units 
of heat per pound, without reference to who wishes sugar 
or heat. 

Exchang-e Value is like the location of a place East or 
West. San Francisco is not (considered alone) more West 
than New York. We cannot say "Denver is 500 miles 
West" with any sense, without adding what it is west of. 
West is solely comparative. There is no Natural West. 

In practice we set up a stake at Greenwich and arbi- 
trarily create East and West from it. That is our basis of 
comparison. Likewise we take some species of property, as 
tobacco, or money, or cattle, or pelts, and create a basis of 
market-value comparison. 

How greatly any one desires a thing has nothing to do 
with its utility. 

One phase of the utility of a specific thing may appeal 
to one individual, another phase to another. One may wish 
tobacco to chew, another to smoke, another to keep moths 
away. One may esteem cows for the utility of their flesh 
for food; another esteems them as an object of worship. 
The utility inherent in anything is not therefore affected by 
individual desire, or condition. 

Utility is but one of the several factors of lack and ex- 
change value. One desires one thing for the certain slight 



26 RIGHT AND RICHES 

utility it possesses and finds there is a certain degree of diffi- 
culty in getting it, while a second thing is of much more util- 
ity to him, but of no difficulty of procurement whatever. Yet, 
because of the difficulty of procurement, he esteems the first 
more than the second. He will be careful that it is not 
wasted. 

Herein, then, we see the second factor of value, hindrance 
to procurement. The active factor of endurance here comes 
into play. We do not esteem the utility as long as there is 
no lack, and there can be lack only in the degree in which 
there is hindrance to procurement. Hence, the person will 
do without, or lack anything, only up to the degree of diffi- 
culty of getting. The amount of toil or discomfort he will 
endure will indicate how much he lacks it, will indicate how 
much he needs the use of it, provided he may be able thus to 
procure it. 

This then to him is its need-value. 

Articles have this phase of value to one person entirely 
isolated from all other persons, as was Robinson Crusoe. It 
does not depend on exchange. When a city's water supply 
is low sometimes its use is forbidden for sprinkling lawns, 
even though paid for by the gallon, because of the urgency 
of its need for household use. 

The ability to exchange brings in the other phase of value 
known as exchange-value, often confused with this individ- 
ual need or lack. Individual need relates solely to personal 
experience, what we can discern with the senses, just as do 
the measure of distances, expressed by the terms arm's 
length, a day's journey, and so on. But astronomical dis- 
tances are not appreciable to the senses. They are only ap- 
prehended by science, by mathematics. 

When a person has need for a horse and has labored to 
procure one, he mav exchange it for a cow which he feels 
a greater lack of. Hence, exchanging originates from his 
individual need. But presently there evolves the procuring 



VALUE 27 

or making of things of which the individual has no lack or 
need, but procured solely for the purpose of exchanging 
them for whatever else he may lack. From this arises an 
entirely new phase of value; for his estimate of value of 
such product has no relation whatever to any utility in it to 
minister to his lack. He cannot measure this new phase of 
value with his senses, but only by mathematics. 

It may be tobacco which the individual is producing, 
though he does not use it in any manner. He must there- 
fore arrive at its value by a process of figuring. He says a 
pound of tobacco will generally get me about so much beef, 
or so many pounds of flour, or will get me a coat ; hence, he 
labors to grow it, and prizes it until he exchanges it for 
what he wants. What he will be able to get with it depends 
somewhat on how much others desire and lack tobacco ; but 
the producer knows, nor cares nothing about this lack. He 
cannot. What he does learn is the mathematical comparison 
between tobacco and other things in the market, which is 
their market or exchange value, or ratio. 

Now, strange as it may seem, the market value of things 
— the mathematical comparison of their exchangeableness, 
becomes more familiar to us than their worth for our per- 
sonal needs, their real worth to us. Desire for them, to a 
great extent, is measured by what they will buy. 

It is often* mistakenly considered that the individual 
lack or need of things is approximately the same as their 
market value, but there is scarcely any relation between 
them. The old proverb is more nearly true: "One man's 
meat is another's posion." What one urgently seeks is trash 
to another. Even what the majority esteem highly and 
think essential are useless to a large minority. Exchange 
value is the counterfeit of real goodness. Bread which we 
think so essential is unknown to millions of people. 



28 RIGHT AND RICHES 

You do not commonly rate various commodities accord- 
ing to their relative capacity to satisfy your desires, but ac- 
cording to their market price. You rate a house at what it 
will sell for, not by its elegant design of architecture. You 
compare silk, cotton, linen and other textiles not entirely by 
their serviceableness, their capacity to give the best results, 
but largely by their price. 

Again a thing of not very general utility may serve your 
purpose well. Some things of innumerable uses are very 
cheap because plentiful. Utility is not approximately com- 
mensurate with either our individual need nor with the ex- 
change value of things. 

The exchangeable value of a thing nearly dispenses with 
the conception of utility. Exchange-value is a phase be- 
yond the comprehension of the senses, and dependent on the 
intellect ; for it is not absolutely requisite for a thing of the 
greatest exchange value to have any utility whatever- 
Money need not, should not have any utility, that is, except 
utility as money. 

We may to-day go over the market quotations, which are 
simply the record of exchanges, and fix a table of the rela- 
tive value of a thousand commodities in Chicago to-day. 
But to-morrow it will be very different. We may say X 
bushels of wheat are worth Y bushels of oats; X tons of 
hay are worth O bushels of potatoes, etc., etc. We may 
simplify this and say 1 ton of hay is worth 12 oz. of silver, 
1 bushel of corn is worth 1-3 oz. of silver, 100 lbs. of hogs 
is worth 4 oz. of silver, 1 lb. butter is worth ^ oz. of silver. 
Here we use silver in all the comparisons. This is said to 
be taking one thing as a standard of comparison. This is a 
convenience, for we more readily comprehend a comparison 
with a commodity we have compared many other things 
with. But since exchange value is not a quality of any ma- 
terial thing, but only a temporary comparison between them 
as indicated by the willingness of people to exchange on 



VALUE 29 

such a basis, it is then impossible that any species of goods 
can be made a measure of value. 

The ratios in which things are given in exchange has 
little reference to the labor consumed in their making; 
neither any reference to their use as subsistence. Such ra- 
tios are determined by the fancies of the exchangers, by un- 
accountable circumstances — the weather, accident, social 
events, religion, holidays, innumerable causes. The law of 
value called the law of supply and demand needs qualifying. 
Supply and demand are subject to all the above influences. 
But after we have the relative value of a thing, it remains 
for each of us to translate it back into our "lack value ;" 
what the foregoing of it would mean to us. 

That a pound of butter to-day is worth 5 yards of mus- 
lin, or two pounds worth an axe, does not express either their 
utility nor yet an individual's relative need for them, though 
it is usually presumed to. Here is the distinction: Lack- 
value means intensity or urgency of need. This urgency is 
measured by the price one will pay up to a certain very im- 
portant point, which is often neglected; that is, up to the 
limit of the ability of him who lacks. But the urgency does 
not stop there. 

What is the lack-value of a bushel of grain ? To one it 
may be a trifle. He slightly considers it. If the exchange 
value be very low he may keep a few more horses or if high 
a few less. It is a slight matter. Perhaps he does not even 
take cognizance of it. But to another what an awful tragic 
lack-value has this bushel of grain. What terrible urgency 
is expressed in its lack ; for though the exchange value is low 
he has nothing to exchange. He cries to see his children 
dying for it. He has already given all of his meager wealth 
for supplies of it. He has offered to labor, even to die, to 
get further supplies but to no avail. Says Emerson : "Ah, 
if the rich were rich as the poor fancy riches." 



30 RIGHT AND RICHES 

Does Rockefeller know this value of coal oil? No! 
Ask some poor mother who cannot furnish it that her son 
may have light to pursue his studies. Does Baer know the 
lack- value of coal? Ask some father who sees his child 
dying from cold for want of coal. Does Havemeyer know 
this individual value of sugar? Ask some poor country 
folks, who, though the fruit is growing wild about them, 
cannot get sugar to sweeten it. Labor can express the in- 
tensity of lack, only to the extent that it can supply it. The 
price of bread does not essentially increase in very great ratio 
when millions are starving. 

Exchange value is a cold, merciless quantity which takes 
no thought of one's neighbor. Exchange value calls for its 
pound of flesh, not caring whether it comes from the slaugh- 
ter of cattle or hogs, or from the slaughter of men and 
women in the sweat shop, or from the slaughter of helpless 
infancy in child labor. This common method of rating 
values by the dollar mark, rating things by what they will 
bring on the market instead of what they mean in comfort, 
health, happiness, yes, even in morality, in human life — in 
manhood and womanhood — is the cause of much wrong. 
Even in the simpler things of life this confusion may be 
seen in persons' ordinary shopping. We see them buying 
things of no use whatever, simply because the exchange 
value or price is high, and doing without the cheaper things 
for which they have many times the need. 

Women judge value more from the sense of negative en- 
durance, from having to choose what they must forego, 
and men more from the active effort they must endure for 
them. Neither view is perfect of itself. It is time we all 
paid more attention to the real value of things according to 
the enduring good they confer; according as they tend to 
the bettering of humanity. When we sit by our blazing 
fires in winter we should not forget what an awful tempta- 
tion there is for the poor destitute father to steal coal to 



VALUE 31 

keep his family warm. What does it signify that coal is 
only $2.00 -per ton, if he has no money at all? 

Theorists have attempted to create a measure of value. 
There can be no measure of value, neither lack nor exchange 
value. Some have suggested labor as such a measure. But 
labor does not by any means measure human need, for the 
reason above stated, that it will not always procure what 
we lack on any terms. And it does not measure exchange 
value because no two men's labor is of the same effective- 
ness, or compensative purchasing power, because wages 
have no relation to the toil and suffering of labor to the in- 
dividual. You cannot make a measure of value unless you 
find a commodity which will not alone have always the same 
utility, but one which people will always hold in just a cer- 
tain esteem. 

Money is the best attempt at such a measure, yet it is 
never the same for two successive days. Exchange value is 
but remotely dependent on Individual Need or Urgency. It 
is but a ratio, and not even a ratio of the comparative 
urgency of things, but only a ratio between opinions as to 
how intense such urgency is, or will be. 

A big daily once had a guessing contest on the attend- 
ance at a fair on a certain day. Now, suppose there had 
been another guessing contest on what the average of the 
guessers would be. To estimate this average one would not 
only have to take into consideration the attractiveness of the 
fair, how it was advertised, etc., but how those who guessed 
would rate all these prospective indications. 

Exchange value depends not only on shortness of supply, 
on largeness of need, but on innumerable elements that may 
be expected to influence people's opinions of the supply and 
need. 

There is no limit to the quantity of a commodity sought. 
The only thing that in any sense fixes a certain quantity of 
a commodity as a normal supply is, that people's habits 



32 RIGHT AND RICHES 

have become adapted to that amount. Therefore any de- 
crease from the usual supply increases its price, and any 
increase above what has been usual tends to cheapen it, if 
not accompanied by increase in many other groups. A 
commodity may be low^ered in price by increase in the supply 
of others in its group, though this is not sure to result. A 
good supply of oil may make coal of little value; on the 
contrary, however, the electric light has apparently in- 
creased the demand for gas, even for illumination, by edu- 
cating people to bright lights. 

Overproduction is a favorite word of the inverted 
school. There has never been such thing as overproduction, 
nor ever will be. There has been, is, and there is likely for 
some time, to be underconsumption. Thousands, millions, 
do not know what plenty means. 

Exchange value is not commensurate with the capacity 
of the thing, to contribute directly to the comfort of its pos- 
sessor, but with its capacity to induce others to contribute to 
his comfort. 

Exchange value is negative to all who seek. 




CHAPTER IV. 

PropERT'y Ess^nc^. 

''Wealth in the gross is death, hut life diffused:' 

— Pope. 

I HAT is the Essence of Property? 

Exchange Value, for 'Troperty" does not in- 
dicate the measure of the innate serviceableness of 
things, their capacity to add to the sum of human 
enjoyment, but exactly the opposite— which is the power to 
hinder enjoyment, to command the labor and wealth of 
others. 

What constitutes Value? 

It arises from the pressure of desire against hindrance. 
Desirers seek and hinderers refuse until a compromise or 
compensation is agreed upon. This compensation is the 
value of the thing desired. The value of property is analo- 
gous to the pressure of steam. There is no value to steam 
for motive purposes without its restriction by the confining 
boiler and engine. Its value is measured by the work it will 
effect in the engine. The value of property is through its 
restriction by workers, and arbitrary possessors. This value 
is exemplified in the results it will produce or buy. 

Again, value may be illustrated by the electric light. The 
hindrance to the electric current in passing through the 
filament produces heat. When the hindrance is of the right 
degree the heat is sufficient to produce light, but when this 
hindrance becomes so great as to interrupt the current, the 
value in heat or light ceases. In like manner the hindrance 
to the current of desire for land, resources, or goods, pro- 
duces income in the shape of rent, royalty or price, and con- 
stitutes a value in the land, resource or goods. But when 

33 



34 RIGHT AND RICHES 

this hindrance is made so great as to stop the use, it inter- 
rupts the value producing current. Thus cities are ruined by 
booms. We see the use of electricity for heating irons, for 
cooking apparatus, for several different classes of lamps, 
which give light through heat. Some use carbon filaments, 
others various minerals. The utility of all these utensils de- 
pends on the quantity of heat. Now, it is plainly evident that 
the heat is not inherent in the carbon of the filament, nor in 
the wire of the coil used. It inures from the pressure of the 
current against the resistance or hindrance imposed. The 
weight, bulk, quantity, shape and consistency of these utilities 
— filaments, coils, etc. — have no ratio to the heat output. A 
carload of carbon filaments would not produce a spark of 
light when not being acted upon by the current with the proper 
degree of hindrance. Just so, wood, iron, cloth, glass, china, 
any species of goods has no value of itself except as acted 
upon by the ''current" desire and the resistance of owners 
through hindrance to use. Value is not IN things. Value ex- 
ists and continues in thought — in the current opinion or es- 
timate of the desire for, and hindrance to having things. 
The things are only the medium through which the current 
of satisfaction flows to desire. 

Desire varies as does the electric current in the filament. 
It may be artificially increased or diminished within certain 
limits. Intelligent education or advertising increases the 
intensity of desire. Hindrance to having things is also var- 
iable. 

Strictly speaking "things" do not constitute property. 
Value constitutes property. If things are the medium of 
satisfaction, to desire, with a reasonable restriction to their 
use there arises an opinion relating to such things, a vari- 
able estimate of their utility and availability, which con- 
stitutes value ; a value, not IN them, but relating to them. 

Hence, the law of value is: Whatever increases desire 
for certain articles tends to increase their value. Whatever 



PROPERTY ESSENCE 35 

tends to induce or enable owners or makers to increase hin- 
drance, tends to increase value, provided it does not in- 
crease to such an excess as to divert the current of desire — 
that is, to cause some substitute to be provided for satis- 
faction. 

People wish light. Not particularly that made by elec- 
tricity or oil, but just light. Perhaps they prefer the cost- 
less daylight. But this is not at all times and places available. 
Hence whatever furnishes the medium or means of good 
light is sought. The desire for light has a relation to such 
apparatus. But some one asks, has not the fine machine, 
built so beautifully and strongly of good steel, a permanent 
value? Not in itself. Perhaps what it is made to produce 
will become obsolete in a few months. Perhaps a machine 
so much superior will be built that it will be only so much 
scrap. 

Strictly speaking, desire seeks not things but satisfac- 
tion. People desire to be transported. Not essentially by 
railroad. They desire goods moved; whether by boat, car, 
wagon, auto-truck, or airship, they care not. Cars, ships, 
trucks, etc., are of value in the degree that they satisfy this 
desire and coupled with the degree of their owners' restrict- 
ive control. So with everything sought. The pressure of 
seekers, against the withholding of the holders, gives things 
value, makes property of them. Holders of property are 
impelled to base their price somewhat on what it would cost 
them to replace it; hence, the wages, rent, interest, all the 
charges of producing or procuring new supplies, enter into 
the reckoning of prices. Plainly, goods cannot continuously 
be sold at less than cost. Hence, loosely speaking, they are 
usually worth what they cost. 

Whatever is an obstacle to procuring supplies, whether 
natural or purely arbitrary, tends to maintain the price of 
such supplies. Suppose one has a ranch where he may pro- 
cure water by pumping from a depth, or by buying from 



36 RIGHT AND RICHES 

some one who controls a flowing stream which needs no 
pumping; will not his cost for such water be whichever is 
cheaper ? The price of fuel depends at certain places on the 
arbitrary charges made by owners for oil flowing sponta- 
neously from the earth, or on the railroads' price for coal, or 
the work of cutting wood. Arbitrary hindrance as much 
maintains prices as workers' wages. 

Value as thus maintained is termed exchange value. It is 
a value as between different individuals. Between present 
owners and those who desire to procure. 

Value, commercial value, exchange value, property value, 
individualistic value, is quite distinct from utility or use- 
fulness. In arid regions, water for growing crops is fur- 
nished by ditches from reservoirs or streams, or by pumps. 
Such water is property. It has exchange value. Owners 
of ditches derive immense incomes therefrom. The crops, 
and therefore the wealth production of the communities, 
depend on this water property. But in other districts water 
for growing crops comes from the clouds in rainfall. It 
serves the same purpose. On it depends the wealth pro- 
duction of such district. Yet rain is not property. It has 
not exchange or commercial value. It is not counted part 
of the wealth of the district. Why? Because it is not sub- 
ject to control, to purchase and sale; it is not "proper" to 
an individual owner. 

Hence, we may see that the amount of value of property 
in a community does not measure the comfort or means of 
satisfaction in such community. The canopies over the 
beds in Louisiana to save sleepers from being devoured by 
mosquitos are property. But the people of another place 
where mosquitos are absent are not poorer for lack of such 
property. People of milder climates are not poorer for 
lack of triple windows, immense stores of winter coal, 
heavy brick walls, weighty furs and clothing required in 
the rigorous climate. 



PROPERTY ESSENCE 37 

Now, the important idea here sought to be impressed 
is that value in property is not beneficial to humanity col- 
lectively. Usefulness is what blesses us collectively. Ex- 
change value but represents the power embraced in the 
ownership of an article of property to command wealth or 
service. "Let in the new and renewing principle of love, 
and property will be universality," says Emerson. 

Exchange value is beneficial solely to owners. The heat 
of the Mississippi Valley causes electric fans and ice boxes 
to be almost a necessity, while in San Francisco they are 
almost superfluous. The demand for current in the ''Val- 
ley" adds to the value of electric property. These demands 
enable electric and ice companies to collect large revenue 
from the people. But is San Francisco poorer by reason 
of being almost without fans and ice? In one city, by 
reason of frequent storms or earthquakes, buildings must 
be built of great endurance, while in another where there 
are no storms nor freezing, they are of light and cheap con- 
struction. Is the first city richer for its more costly build- 
ings? In one city rents are low and lots correspondingly 
low. The real estate may not have but half the selling 
value that it would if rents were as high as in another city. 
But is the city poorer therefor ? Only the utility of property 
aggregates to the community collectively. 

Value is positive to him who wishes to sell, but negative 
to him who must buy. High prices for potatoes benefit 
growers but impoverish eaters. But plentifulness in utility 
blesses all. 

The arbitrary restriction of supply by those who, by 
any means, control supply, establishes value; determines the 
"propertyness" of a thing, as much as the difficulties of 
growing, mining or fabrication. 

Hence, the re^nT of land combines with the wagiJS of 
labor, and the inte^rest of capital, to give vaeue; to output. 



38 RIGHT AND RICHES 

But only the productive factors, labor and capital, give util- 
ity, add comfort and satisfaction. 

Trusts greatly enhance the aggregate value of the prop- 
erty they control, while perhaps lessening the actual supply 
of utilities. 

We have no measure of utilities in an aggregate. In 
some lines there is some sort of an attempt in this direction. 
We speak of so many candle power of light, so many rooms 
in a house, so many seats in a theater. But to aggregate 
we must say so many dollars' worth of food, buildings or 
what not. The new buildings built in a city in the last year 
may be rated at a million dollars and yet be less in number 
and utility than those of ten years ago, which cost but half 
a million. 

This lack of words or even definite ideas to comprehend 
the utility phase of things is one thing which make econom- 
ics so difficult to grasp. With the present status of thought 
the quantity and importance of property must be rated by 
its exchange value. 




CHAPTER V. 

Property Evolution. 

HERE is a kind of property that is permanent, 
fixed, whose use does not injure or diminish it. 
Areas of the surface of the earth as sites for 
homes and other uses are fixed property ; use does 
not injure this class of property. The site occupied by a 
home thousands of years ago still exists. It requires no 
renewal. 

There is another class of property which is consumed 
with use, which depends for its existence on constant RE- 
NEWAL either by NATURE or MAN. This is Wealth. 
Food, clothing, shelter, art, means of transportation, fuel, 
etc., are wealth. Wealth does not depend solely on labor. 
It is supplied also from spontaneous natural growths; as 
grass, stock, fruit, etc., accruing to land owners. Wealth 
does not endure long. Some a day, some a week, month, 
year or even a generation, as milk, ice, meat, cloth, wood, 
iron. 

One may procure a piece of FIXED PROPERTY, hold 
it without effort during his life and bequeath it to his suc- 
cessors. But it is necessary for us all to be continually ac- 
quiring a renewal of our supply of wealth. 

Under primitive conditions man procures this renewal 
by adapting the wild unlimited growths and deposits of ma- 
terials to his use. He kills game, to secure food and skins 
from which to make clothing and shelter. He catches fish 
from the boundless waters. He cuts trees from the limitless 
forest. He kills the bear or buffalo from the herds, so 
numerous and plentiful that he thinks it not waste to take 
the hide and leave the carcass. But even so he finds some 
things only available at certain seasons. Fruits, nuts, etc., 

3- 39 



40 RIGHT AND RICHES 

must be gathered and stored in season. Fish are more 
plentiful at certain seasons. He must gather in stores or 
stocks of such things until the next season. He does not 
find all the things he requires at one location. He must 
bring some of his supplies from a distance. To do this he 
needs means of transportation, boats, wagons, etc. He 
may find it even more convenient to cultivate crops or do- 
mesticate animals. This requires fences, barns, implements. 
For his stores he needs warehouses. All the stores, ware- 
houses, fences, barns, boats, wagons, implements are useful 
in making his work effective. They are his Capital. 

To have capital he must put by what he should like to 
use in enjoyment at once, or must devote his time to pro- 
curing wealth for capital instead of procuring something to 
enjoy at once. But he soon learns that by this abstention, 
this working for and applying wealth for a future use, he 
may have much larger supplies and with less labor. As 
men become more civilized and educated in science and in 
neighborliness, the tendency to create capital is stronger. 

But all wares must be made from natural supplies of 
material. Production advances but little, until the producer 
finds that "knowing persons" have anticipated his need of 
raw materials and have seized upon all lands which contain 
them. As he advances further, he finds the avenues which 
lead to markets barred by toll gates. These persons, like the 
Moor bands, now being suppressed, demand a large share of 
his output for this access. 

We see that output is shared between the producers for 
their labor and capital, and those who have the power to 
hinder the use of natural opportunities. This hindering 
power embraces the ownership of land, mines, franchises, 
and trade monopolies. Their owners gain possession of 
them either by violence or graft, or by taking them before 
society's needs have grown to require them. Society, 
through the ignorance, fear and greed of its members, for- 



PROPERTY EVOLUTION 41 

bears to disturb them and confirms their title thereto by 
laws of cession or grant. Hence, we may term all such 
property, as consists of control of natural or social oppor- 
tunities, CONCESSION. 

Property consists not in physical volumes or areas, but 
in authority. Property evolves from and consists in the con- 
trol of others desires, through the command of the physical 
or functional entities on which their satisfaction depends. 
Hence the power to permit or hinder use constitutes prop- 
erty. 



CHAPTER VI. 

Propkrty Precepts. 

HE following facts about property are important 
to remember : 

1. That property evolves in a thing from the 
first recognition of authority to hinder its use. 

2. That laws of property are dictated principally by 
and for the advantage of the owners of property. 

3. That the existing basis of ownership is not even 
approximately founded on right. 

4. That government was forever instituted and founded 
on the theory of the superior rights of the fortunate, but 
even so, that order with injustice is better than anarchy, 
and that rapid strides are being made toward improvement. 

5. That decrees or grants of title by one generation is 
not an obligation that the succeeding generation is morally 
bound to respect in making their laws. 

6. That one's claim to the reasonable requisites of life 
is not dependent on his labor. 

7. That each has a right to an equal supply for person- 
al needs, irrespective of his productive or acquisitive ca- 
pacity; but that each person's obligations to society are in 
proportion to his natural or acquired capacities. 

8. That the right to control the means of production 
is in some measure justified by their successful use for the 
good of society. 

9. That the opulent have no meaner idea of the rights 
of the poor than the poor have of their own rights, and 
oppression is supported by the false ideas of the oppressed. 

10. That the intensity of lack is in no degree measured 
by Exchange-value. 

43 



PROPERTY PRECEPTS 43 

11. The relative Exchange- value of things is not like- 
ly to be their relative worth to any one person. 

12. The Exchange-value of a thing depends not on its 
utility to one, but what it will procure him from others. 

13. Value is not in things, but in the prevailing opin- 
ion of them. 

14. Desire is not for things, but satisfaction. 

15. The value of a thing is the compromise between 
desire and hindrance. 

16. Increase of exchange- value in a commodity is as 
much loss to the users as it is gain to the holders. 

17. That property, under the present status, consists 
less in the ability to use than in the power to hinder use. 



PART THREE. 



Production. 

Chapter I. What Production Compre;he:nds. 

" II. Exchange: and Art. 

" III. Labor and Wage:s. 

IV. Wealth. 

V. Capital, Increase and Interest. 




CHAPTER i. 

What Production Compre:hends. 

|0 study the condition of output or the replenishing 
of the stock of wealth, we must define a very con- 
fusing though common term of economics — Pro- 
duction. The principal confusion of economic 
thought arises from a double meaning attached to this term. 
When a Robinson Crusoe lands on a fertile island he finds 
there the sources of abundant supply of subsistence, but little 
of it IS in condition for his use. Trees must be cut for fuel, 
and shaped and built up for shelter. Food must be gathered 
or provided by killing animals. This takes effort on his 
part, or labor. To provide a satisfactory supply he must 
plant and cultivate crops. The supply which he has thus 
adapted, or even which is partly completed for use, by his 
labor, he prizes and protects from waste. It is valuable. He 
has caused it to have a special utility for his enjoyment above 
all the wild growth of the island. He has ''produced" it 
with his labor. Here is production in its true economic 
meaning. 

Production, therefore, comprises all effects of human 
agency, directed toward service and increase, or replenish- 
ing of supplies for the satisfaction of desire. 

Service is that part of production which does not result 
in a tangible output but is applied directly to satisfaction. 
Teaching, nursing, domestic service, etc., are examples of 
service resulting from labor. Hotels, means of transporta- 
tion for passengers, theatrical and other amusements, are 
examples of service resulting from labor and capital. Service 
has the general nature and is produced by the same methods 
as is tangible output. 

47 



48 RIGHT AND RICHES 

Many writers confuse natural forces with human agency 
in treating of production. To be sure, human agency can do 
nothing without natural forces; but the use of such forces 
do not for that reason constitute them factors of production. 
To illustrate, let us take the term heat. Heat is a certain 
phenomenon observed in its effects on the human body and 
on other material elements. Now heat may be produced by 
the use of coal, or wood, or gas, or electricity, or friction. 
There is animal heat and sun heat and chemical heat. Yet 
we do not confuse heat with fuel, or chemical action. Heat 
is a distinct phenomenon. It is a powerful and useful agency 
for many purposes. We care not whether it results from 
fuel, electricity, or sunlight. 

Human agency must use a multitude of natural mate- 
rials and forces, but we must maintain our idea of human 
agency unconfused as the sole factor of production. Soil, 
sun, mineral deposits, and such things are not factors of 
production. It is the effect produced on or with them that 
constitutes production. These forces act freely, hence do not 
induce valued the essence of wealth. The profusion of their 
output is not wealth unless humanly circumscribed. 

Webster defines produce: ''To lead forward," ''to cause 
to exist;" he also gives many other definitions, but in the 
economic sense it must be restricted. We must limit it to 
what human agency causes; to the leading forward; the 
making available by human initiative, by human effort. The 
other common meaning of produce, "to yield," referring to 
growths or results of natural causes, must be eliminated 
from the economic meaning. Human agency plants, culti- 
vates and gathers crops ; it mines and quarries useful min- 
erals ; it shapes, modifies and transports. This is production. 
Output of wealth is from both human and natural forces, but 
its production comprises only the human contribution. 




CHAPTER 11. 

Exchange and Art. 

HIS human agency is of two distinct natures, the 

active and the passive. The active agency is called 

Labor, the passive, Capital. Labor actively moves, 

directs and accomplishes. Humanity passively al- 

lozvs its wealth to aid this active element. Produce does not 

mean simply to grow or manufacture, but to make available 

in any way. Exchange is an effective means of production. 

Exchange is often treated by economists as an evolution. 
Exchange is not an evolution, it is a revolution, an innova- 
tion. The wildest savage may incidentally trade his bow, 
or boat, or gun, to another for some other thing. He may 
see what an advantage this is and seek other trades. These 
are incidents. 

But when a community has advanced to a state of in- 
telligence such as to allow one or more of its citizens to de- 
vote his attention solely to the production of one kind of 
commodity, a distinctly new era has opened up. Presto! 
there is born exchange- value ; for exchange value is not, 
as many mistakenly think, simply that comparison of es- 
teem which an Indian might entertain regarding a fine fur, 
a pony, or a boat, as a means contributing to his pleasure. 
Nothing of the kind. It is more nearly like the esteem of the 
gaudy beads which an educated and refined explorer might 
carry into the wilderness to exchange to the Savages, as 
Stanley did — of no earthly attraction, or worth to their 
owner except to trade for what he may desire. He esteems 
them only for what they will buy. 

Thus one engages in production of one commodity 
alone, that commodity being rated by him as though he had 

49 



50 RIGHT AND RICHES 

no personal use for it whatever, but as the wampum or 
beads, which one reckons some other one will wish, and for 
which they will furnish his needs for other things. Ex- 
change starts very early in civilization : "Abel was a keeper 
of sheep, but Cain was a tiller of the ground." 

While division of labor is foreign to that desolate state 
where one would try to supply all his own wants, it is, nev- 
ertheless, the natural inspiration of man's efforts ; but greed 
is not its natural stimulus. Nor may we trust greed to di- 
rect the output and supply of wealth. True, production rests 
on the artistic instinct of man, which rises and expands with 
his moral and intellectual development — with his re-approach 
to his native condition of brotherhood, for what is the motive 
of true art but the desire to bless others by contributing 
what will give comfort and happiness. - 

''Bear ye one another's burdens and so fulfil the law 
of Christ. But let every man prove his own work and 
then shall he have rejoicing in himself alone and not in 
another" — Gal. 6:2,4. 

Someone has tritely said : "Love is the art of hearts and 
the heart of arts." Is it not well recognized that no noble 
art is produced in response to a pecuniary reward? Every 
normal person has the instinct of art in some line, if he 
has not smothered it; that is, of art in its broad sense of 
creating things or service of use and beauty. To use Em- 
erson's words : "As soon as beauty is sought, not from re- 
ligion and love, but for pleasure, it degrades the seeker. 
Beauty must come back to the useful arts, and the distinction 
between the fine and the useful arts be forgotten. It is vain 
that we look for genius to reiterate its miracles in the old 
arts ; it is its instinct to find beauty and holiness in new and 
necessary facts in the field and roadside, in the shop and 
mill. Proceeding fiom a religious heart it will raise 
to a divine use, the railroad, the insurance ofiice, the joint 
stock company, our law, our primary assemblies, our com- 



EXCHANGE AND ART 51 

But Art, starting from such sublime source, may like 
plant life be dwarfed or distorted. The tree repressed and 
stunted becomes knarled and knotty. So art is distorted by 
the unnatural environment of the artist, into morbid phases 
and freakish imitation of ancient degeneracy and ignorance, 
and such phase is often held up as a standard. Wholesome 
art is the outward expression of the inner life of the com- 
munity contemporary with the artist. Such art is mani- 
fested in all the wares and commodities of a people. And 
as the choicest wood, marble, gems and gold are put to base 
uses, so art is put to uses which tend to debase rather than 
to uplift mankind. 

A nation may be pretty well judged by its use of the more 
genteel arts. The most extravagant art of India and some 
other lands is lavished on tombs, as if to emphasize the fact 
that there civilization itself is dead. America has most of 
her art in the home. Art here is for the living. 

Art is for man and not man for art. Art should be used, 
but not worshiped. "Thou shalt not make unto thee any 
graven image, thou shalt not bow down to them or serve 
them." The depraving results of worshiping churches in- 
stead of worshiping in churches; worshiping works of art, 
instead of worshiping by works of art, is sadly shown by 
the populace of old centers of art. The tendency of wor- 
shiping their art by the devotees of sculpture, painting, 
music and other arts which assume the title of "fine arts," 
has distressing effect on such worshipers. The loose mor- 
als of persons who go to excess in their adoration is pro- 
verbial. The song or picture of the most exquisite technique 
is not always the most inspiring, enjoyable or elevating. 

There is but one reason why the makers of the finest 
statuary or paintings, or the writers, or interpreters of 
beautiful music, should become egotistical about their art 
more than the workers on a fine auto, cottage or boat. This 
one reason is because their work is more individualistic. 



52 RIGHT AND RICHES 

One man makes a painting alone, or sings a song alone. 
Many must co-operate in the auto or boat. 

The art which blesses mankind is inspired by love. But 
all output of physical commodities does not emanate from 
this divine impulse. Therein is one cause of our troubles. 

Exchange, commerce, is necessary to give scope to the 
artistic instinct and talent. A hermit, isolated from society, 
cannot have either inclination or opportunity to create much 
of beauty. The artistic instinct is a part of man's spiritual 
nature. Its desire is to give ; greed seeks to take. 

Greed and selfishness repress art. The artist seeks not 
to promote his own ease or satisfaction, but that of others. 
The knowledge that he does so is his greatest reward. Yet 
this does not lessen the pecuniary reward due him, which is 
the supplying of his needs as a compensation. However little 
appreciated, this noble motive is the main stimulus of com- 
merce. Because of greed, producers dare not be completely 
disinterested. That business is on a mean and sordid basis 
whose main motive is not the good of those it supplies. It 
may seem that great success is sometimes achieved by con- 
cerns whose only object is gain, but it cannot be denied that 
success is surer and more common, from the high purpose 
to give the greatest possible good to patrons. 

The next step after some have engaged to produce but 
one line, and to depend on exchange for their own requisites, 
is the engaging by some solely in the occupation of promot- 
ing exchanges, and ceasing all efforts at growing or fabri- 
cating commodities. Such persons fill a necessary place in 
the development of industry. To be adapted to such a 
sphere, which most persons are not, one should have a ca- 
pacity to judge the commodities he handles and to interpret 
the desires of the people, so that he may help to direct pro- 
ducers how to furnish an output which will satisfy people's 
desires. 



EXCHANGE AND ART 53 

Exchange is a vital part of production, for shoes on the 
retailers' shelves are, from an economic view, not completed 
except in a degree, any more than when they are simply 
leather, thread, etc. They must be fitted to feet and sold, to 
be completed. Output may be roughly separated into 
groups, each of which is intended to satisfy a certain desire, 
as grains, potatoes, fruit, etc., for food; lumber, stone, lime, 
etc., for building. Each person seeks to satisfy his desire 
for food, clothing, ornament, music, etc., by offering some- 
thing of another group in exchange for it. This exchange 
is accomplished by first exchanging for the symbol of wealth, 
money, and then changing the money for what we desire. 

An article is actually of more value to the buyer than to 
the seller. This is the legitimate profit of the merchant. He 
must keep a stock subject to loss by fire, change of style, etc., 
must pay rent, and many other expenses, in order to allot 
a pair of shoes to each wearer that will suit him in price, 
style and comfort. 

Many seem unable to distinguish any radical difference 
between gambling and business risks. Business risks are a 
necessity. Some one must carry them, and the premium 
which the consumer pays for goods, reimburses merchants 
for their losses. But gambling is an artificial risk, created 
for no final good purpose, but only to catch those who wish 
to get money without giving a return. Much that is called 
speculation is only gambling. Gambling is a total loss to the 
community in wasted time, energy and manhood. It is com- 
mon to be charitable to many useless and harmful lines of 
exchange or business, and class it with respectable industry ; 
but no business deserves such respect that does not actually 
contribute to the final supplying of comfort and happiness. 
The risks and losses incurred in honest trade are but part 
of the total cost to consumers. It is desirable, of course, to 
keep them down to a minimum. Risks created for no real 



54 RIGHT AND RICHES 

purpose but to gamble on should be stopped by law, and 
happily such practice is becoming more general. 

Goods of different groups may be procured from the same 
locality or from widely distant lands. The greater portion, 
however, arise right in the same locality. The production 
of salt goes on in the same field with grain, glass, fish, 
leather, gold, copper, etc. True, where coffee grows, little 
corn is raised, and to some great gold mines water must be 
brought four hundred miles up an elevation of two thousand 
feet. Yet som.e points, by common consent, become pro- 
ducers in certain lines. One place monopolizes the brass 
button and buckle business, another makes beer, another 
automobiles. Sometimes this is because the skill developed 
in some pioneer plant clusters about it in other works. But 
whether from near or far, the production in one group. is 
paid for from the product of many others. The motive of all 
true production is the good of the consumer, to better serve, 
and satisfy mankind. This motive in a considerable measure, 
however, is frustrated, as I shall endeavor to show. 

Government should encourage the production of such 
things as are for the best interests of consumers. The mak- 
ing of intoxicants and injurious drugs should be discour- 
aged. The highest standards in all lines should be en- 
couraged. The Pure Food Law, recently enacted, which 
discourages adulterations, is in the right direction. One of 
the Dakotas compels the labeling of paints with the exact 
ingredients. Government should busy itself with supplying 
its people by encouraging the largest and the best possible 
supply of things that promote their happiness, and give 
special care to the things needed by the poor. Then there 
would be no need of worrying about foreign markets. 

To give, is an imipulse antecedent to, and correlative with, 
to create. Guaranteeing abundant use by all, is a means, 
both reasonable and humane, to promote art and exchange. 
The springs of output which are not drawn upon, like the 



EXCHANGE AND ART gg 

cow that is not milked, soon goes dry. There is no lack 
of ever-w.II,ng producers, if the application of their output to 
Its ultoate purpose is not thwarted by greed; for "it is more 
blessed to give than to receive." 




CHAPTER III. 

Labor and Wag^s. 

ABOR, as one of the two factors of production, em- 
braces more than is meant in the common use of 
the term. The common signification is mechan- 
ical, or muscular work, the more intelligent or 
trained portion of such workers being popularly termed 
skilled laborers; those untrained, common laborers. Labor 
as an economic term includes the efforts of both these classes, 
and more. Labor may be defined only as a factor of pro- 
duction. 

Labor comprises all hum.an action tending to the satisfac- 
tion of desire. It includes the thought applied to inventing, 
planning, directing, discovering, and organizing, as well as 
the muscular, or mechanical effort devoted to producing sat- 
isfaction. 

Labor is not synonymous with toil. Toil may produce no 
result. A desirable result is essential to labor. A toilsome 
effort usually is labor. Labor is generally unnecessarily toil- 
some and unpleasant. The belief seems to be widespread 
that results depend on strain, weariness and worry. But 
labor may be the greatest of pleasures. The most intelligent 
business decisions, good management of men and operations, 
are not dependent on strain and worry. Neither does labor 
consist in mechanical force or "horsepower." A half dozen 
slight persons with intelligence may produce more results 
than an army of muscular ignoramuses. 

The more intelligent the worker is, the more he employs 
nature's forces. A stream of water flowing uselessly down 
the canon may be confined and used as a hydraulic jet to 
tear down and move the very mountains, with little labor, 

56 



LABOR AND WAGES 57 

moving more dirt and washing out more gold than infinite 
crude labor. The master laborer, the "captain of industry," 
brings about an organization which turns out many times 
the former output. Yet wages are not generally in ratio to 
the importance of the results of labor to society; for the 
master laborers, who make not alone "two blades of grass 
to grow instead of one," but who make whole plains of 
desert to "blossom as the rose," are often so absorbed in their 
good work as to neglect to secure their rightful pecuniary 
recompense. 

Workers demand a compensation for their labor called 
wages. As all productive effort and service is labor, so all 
returns for such effort are wages. Wages in common par- 
lance refer to a payment to laborers at stated intervals by a 
"boss." But as an economic term, wages include the reward 
the president of a great railroad or the manager of a great 
industry receives for his efforts. Wages are not only pay- 
ment from an employer to an employe, but include as well 
the reward for effort represented in the product of one work- 
ing for himself. Burbank's profits from his botanical work 
are his wages. The game is the reward to the hunter ; the 
fish to the fisherman. Under primitive conditions the laborer 
takes the whole product as his reward. As civilization pro- 
gresses he requires capital and must divide the product with 
its owner as interest. Then the land from which he gets the 
essentials of production acquires value and part of the prod- 
uct must go as rent or accessage. 

Education o^ Laborers. 

The processes which multiply output must have intelli- 
gent direction. Seed will not grow with advantage unless 
skill directs its planting. The product of chemical action is 
useless unless properly conducted. The knowledge requisite 
to direct processes of production is called Science. Science 
is the truth discovered and adapted to a useful purpose. The 



58 RIGHT AND RICHES 

results of science on the output of useful things in recent 
years are marvelous. Electricity alone, which is merely a 
process and not a physical entity, is doing the work formerly 
requiring millions of men. Output has not simply been 
added to by Science, but multiplied. What is the price of 
Science? In the main it is without cost to whomsoever 
would use it. It belongs to Society as a heritage from the 
past. In some measure Science is personal property. Some 
ideas and processes are vested in the private ownership of 
those who discover them, but only for limited periods. This 
is right. But only a small fraction of invention or discovery 
is patented or copyrighted. 

Employers of labor are neglecting a most profitable 
means of increasing their business by failing to establish 
technical schools in connection with their plants. For a small 
cost a hall could be built, or leased, convenient to the factory 
and made inviting by such furniture and supplies as could 
be afforded. Some one skilled in the line of production 
in which the factory is engaged could be had to give lessons 
and lectures at certain periods. All sorts of literature bear- 
ing on the line of production should be kept there, available 
to all employes. It should not be forgotten that the cheap- 
est employe, if given some insight into the art, may discover 
important improvements. Such places could also be made to 
serve as clubs for the men. Decorations and furnishings 
could be partly supplied by subscriptions of employes. Pub- 
lic library branch stations might be secured. In larger estab- 
lishments, experimental laboratories could be had. This has 
been done by some proprietors with especially splendid re- 
sults, both in the exceptional quality of the output and its 
wonderful sale. 

Greater skill and intelligence of employes inevitably 
means greater profit to an establishment as well as the work- 
ers, and especially to society. 



LABOR AND WAGES 59 

The public schools should co-operate with employers in 
this technical, training, paying a share of the expenses of 
such teachers. The regular pupils of the public schools 
should visit these industries in delegations at short intervals, 
in charge of teachers, and study the actual workings there- 
of. At such times the employes and teachers could discuss 
the process foi- the instruction of all. By this means the 
industries would get better results from their operatives. 
The children of the schools would get practical ideas, in- 
stead of boarding school theories, which would encourage 
them not alone to select a calling for life, but would broaden 
their ideas. The time will come when people will wonder at 
the stupidity of the long hours now spent in study of "long 
distance" subjects, tedious history of wars, or things Won- 
derful because far away in distance or because lacking prac- 
tical import. It should be learned that the finest literary or 
scientific education is best grounded when based on a knowl- 
edge of the practical things right about us. 

Purpose:. 

The first precept that should be taught the student is to 
seek the purpose of things; for therein is the inception of 
every progressive thought. What is the purpose of a win- 
dow in a certain place? Is it to be looked out of, or into? 
Is it desired to admit the air, the sunshine, or only the light ? 
We cannot effectively use one conventional style of window 
for all such purposes. What is the purpose of a road or 
street in a certain section? Simply to front houses on? No, 
it is to "go" on. But to go where on ? To the center of the 
city or only to a more important thoroughfare, or to the car 
line ? Is a road simply for the travel of some isolated farm- 
ers to town, or for the great streams of inter-city or inter- 
state travel ? How stupid that we have no such compre- 
hensive system of roads, but just short stretches, which are 
nearly as useless as would be a fence part way around a 



60 RIGHT AND RICHES 

pasture. What is a jail for? To torture and ruin those 
put in it, or to improve them ? What are the great exposi- 
tions for? To make money, or to educate? What is edu- 
cation for? Which is a system of railroads for; the public 
or the owners ? What is taxation for ; to make us poorer or 
to make richer ? 

It is sometimes complained that college graduates can 
make no more income than carpenters or plumbers ; be it so 
— there is no essential injustice implied. 

A recent article stated that Germany had carried technical 
education to the extreme, the graduates being unable to se- 
cure positions of advantage. But does this argue against 
the great advantage of such schools to Germany? Educa- 
tion is largely an investment made by society ; and to society 
is due the dividend. If the education is of the right kind, 
society gets dividends a hundred fold. 

A Northerner asked a Southern Priest if it were good to 
educate the negro. The Priest thought not. Why? Be- 
cause of his antiquated idea of what education is. He was 
then asked : Is not the negro who has been taught to be a 
good mason, carpenter, cook or farmer, worth more to the 
community and himself than one untaught? "O, yes," was 
the reply. "Then is not that education?" asked the North- 
erner. And is not the failure generally in the kind and not 
in the quantity of education? There is too much stereo- 
typing of education. Why should all the public schools of a 
State teach the same thing to every pupil in a certain grade, 
or year? There should be the greatest variation between 
one city and another, between urban and rural school; and 
each city should have numbers of lines of study which might 
be undertaken by different individuals. 

What does the multitude need of Latin, or Shakespeare 
or Algebra? Some individual students should be able to 
study architecture instead of Latin, cooking instead of Al- 



LABOR AND WAGES 61 

gebra, economics instead of Caesar; in other words, present 
social sense, instead of ancient savagery and stupidity. 

The science of tanning is very important and useful, but 
it is needless for more than a very limited number to learn it. 

Gardening has more tendency both to broaden character 
and to be useful than too much mathematics. How to dress 
becomingly is more tending to elevate both individual and 
society than tedious volumes on how nature made mountains. 
Every dollar the community spends on education should de- 
mand a return, not in bookish parrots, but in greater diver- 
sity of accomplishment; greater beauty and harmony in the 
social man. The shaping of courses of study should be 
made with reference to the kind of accomplishments which 
society is most lacking. A good crop of aldermen should be 
produced and put on the market. Then might come a course 
of study for policemen. A course entirely without law 
books, for prospective judges, would tend greatly to advance 
civilization. 

Children should be instructed in both the essence and the 
forms of politeness. They should be taught civic pride, how 
to organize and act in unison for the advancement of what 
they believe to be right. There should be as perfect solidar- 
ity in the army of industry, the army of civic improvement, 
philanthropy and progress as in the army of war. 

But while bountiful results are what benefit society, are 
what all should strive for, still they do not, with our present 
greedy system, immediately determine the scale of wages. 
Wages are the compensation or balance between desire and 
hindrance. This hindrance depends on the laborers — upon 
what they demand for their work. Such demand depends 
on incentive and power. The incentive must be educated, 
the power organized. It must always be remembered, how- 
ever, that the wages can be hut a part of the product. Lib- 
eral wages necessitate liberal production. It is plainly im- 
possible for high wages to result from a small output. 



62 RIGHT AND RICHES 

Labor does not compete with labor as many think, but 
labor furnishes a market for other labor. Isolated incidental 
cases there may be where it competes, such as where an ex- 
cessive number learn one trade ; but, broadly speaking, labor 
is paid with the product of other labor. 

Again, increased wages may fail to result from increased 
output, first, because the product may be cheapened in con- 
sequence of such increased supply. Second, because labor 
is but one of two factors of production and but one of three 
recipients in the division of output. By reason of cheaper 
price, the increased output ma}^ not have increased value, 
or, having greatly increased value, such value may be taken 
by capital, or concession, as increased interest or rent. 

The share received by labor depends on the amount and 
strength of the laborer's demands. Strange as it may seem 
this demand is not in any degree in proportion to the toil- 
someness or unpleasantness of the work. In many cases it 
seems even to be in inverse ratio to such suffering. The 
most pleasant work, even arts that would almost be pursued 
for the very pleasure of accomplishment, often get the high- 
est pay. Why is this ? Because the more free, refuse both 
the work and the pay of the ox. Those little advanced have 
not the initiative to rebel, nor the power to compel higher 
wages. 

There is a sentimental thought that industry depends 
upon these poorly-paid laborers, and a "practical" thought 
which seeks to keep these workers down to their present 
level so that they will not refuse to bear these burdens. Both 
are wrong. As these laborers become more intelligent and 
independent, so that they will refuse to bear these burdens so 
cheaply, there will be found a way to dispense with such 
tasks without discomfort to the consumer. *'The man with 
the hoe" is not a necessity. 

He ''that grieves not and that never hopes" does not 
bear "on his back the burden of the world." 



LABOR AND WAGES 63 

He bears a useless burden. 

Who is the master which thus enslaves him? 

Who but his own perverted thought, his ignorance, 
greed, hate or fear, his indifference to his neighbor or per- 
haps to even his own family? 

Love is the law of liberty, enlarging the capacity and 
broadening the opportunity. "For all the law is fulfilled in 
one word, even in this : 'Thou shalt love thy neighbor as 
thyself.' " 

There is a worthy Master to whom he may go. He says 
"Come unto me all ye that labor and are heavy laden and I 
will give you rest. * * * Learn of me, for my yoke is 
easy and my burden is light." 

Five men in a certain great steel mill now roll with elec- 
trical apparatus thousands of tons of steel daily from ingots 
— an output that a few years ago would have required 
hundreds to have toiled in the heat. The abolition of slavery 
in the South has multiplied the output and enjoyment of 
wealth. Much work is drudgery solely owing to the con- 
ditions under which ir is pursued. Tending a garden is the 
most genteel pursuit, or the dullest toil, according to the 
motive of the worker. 

When workingman, as well as millionaire, learns that the 
true way to rise to freedom from poverty is not by treading 
upon others, poverty and toil will cease upon the earth. 
"God gave man dominion over all the earth" but not as 
many would construe it. He did not give one person do- 
minion over others. The power to command others is not 
a righteous motive for business, or the acquisition of wealth. 
The proper purpose of wealth is the good it will do. Hence 
value, price, is not an essential of wealth in its true charac- 
ter, though those high in position teach that it is. 

Natural wholesome labor is the result of "loving our 
neighbor as (being one with) ourselves." Such labor pro- 
duces the great results and wearies least. 



64 RIGHT AND RICHES 

"And who is my neighbor?" Plainly the one we meet 
in the way ; not alone the member of our church, tribe, city, 
or nation ; but he who needs our sympathy. 

The: Tim^ Factor. 

One of the most important elements of labor is TIME. 
We would all prefer to have our time at our own disposal, 
to use as we please. Moreover, there are expenses which 
occur with the lapse of each day and month. Hence, there 
has arisen the practice of paying for labor by the day. This 
is in some measure being displaced by the piece-work sys- 
tem. 

Workers should be given an insight into the whole scope 
of the business of their employer; should be changed from 
one phase of work to another. Employers should seek to 
interest workers in the final results and not treat them as 
machines. 

All should labor. No one should be compelled to drudge. 
Labor is ennobling. Drudgery is degrading. The highest 
intellectual endeavor is labor. Application to any art, 
whether that classed as fine art, or commercial art, is labor. 
Indeed any art is ''fine art" if finely accomplished. Nothing 
gives more lasting pleasure than accomplishment. Nothing 
has such refreshing and renewing effect as to see results ac- 
cruing from honest effort. Surely it is a reflection of the 
Nature of Our Maker. What a pity that so many seem de- 
prived of the chance to do wholesome labor. Millions are 
seemingly so deprived by concession's engrossment of re- 
sources. Millions more toil at depressing drudgery. Others 
are deprived by caste, by their belonging through birth or 
wealth, to the leisure class caste. But you say they might 
work if they would. Very truly ; but it requires true cour- 
age for a man of wealth to turn aside from the selfish occu- 
pation of exerting authority, embraced in ownership of 
wealth, from speculation and spoliation, to wholesome labor. 



LABOR AND WAGES 65 

It is also unfortunate that so many persons are engaged 
in useless pursuits. And under our topsy-turvy system of 
commerce this class includes those of the best, as well as 
those of the worst characters. For how many consider it of 
any importance that his work should benefit society? 




CHAPTER IV. 

Wi:ai.th. 

HERE is a class of property that is sought for the 
purpose of being consumed. 

To be consumed means to be used up. Not 
essentially destroyed at once, but in a period of a 
few months or years. Food, clothing, houses, vehicles, orna- 
ments, machinery and such things, taken as a whole, are 
rapidly used up, or they decay in a short time after being 
fitted for use. Hence, to maintain a stock of such things 
there must be constant new supplies procured. This class 
of property is termed wealth. 

Writers on economics for some reason seem to have had 
a hard time defining this class of property. They all seem 
to have much the same thing in mind, but their definitions 
are so poor that they become greatly confused thereby. 

To properly define wealth is of absolute necessity, in or- 
der to have any reliable foundation for a definite considera- 
tion of the subject; for economics is the study of wealth. 
Some definitions call it "stored labor." This leads us astray. 
Others, "a product of labor," which is equally faulty. Some 
include notes, bonds and other evidence of credit ; some even 
include land. By the following definition 1 think we may 
identify it under all circumstances. 

Wealth comprises that class of property which is being 
continuously consumed in enjoyment and reproduction; and 
continually replenished by output. 

Output means simply the putting of new supply on the 
market. It does not imply labor, though labor may promote 
such supply. It may accrue entirely from land or from Cap- 
ital without labor. Output comprises all desirable things 



WEALTH 67 

which come upon the market from natural causes or promo- 
tive effort, accruing periodically or continuously, in contra- 
distinction to native or permanent property. 

Land, mineral deposits and forests exist practically per- 
manent in their native condition. They are fixed entities. 
Grass, animals, fruits, etc., manufactures, buildings, ships, 
are output. Growing crops, orchards, vineyards, etc., are 
output. Output and permanent property merge together un- 
til the distinction becomes one of period. Things accruing 
in a period longer than an ordinary generation begin to have 
the nature of fixities. So also do structures enduring longer 
than a generation. Nothing is wealth which is not from 
Output, Land is not wealth ; it does not accrue periodically, 
nor is it consumed by use or time. Franchises, patents, evi- 
dences of debt are not wealth ; they are not consumed in en- 
joyment. Grass grows without labor, yet grass is an output. 
But is all grass wealth? No, only that which is property, 
which has value from being controlled by someone. 

Value is of the essence of wealth as of property in gen- 
eral. Is stone wealth? Yes, if for the purpose of con- 
sumption it has been moved from its natural bed to a point 
more available for use. Does not labor create wealth? It 
contributes to its value, it increases its value, by charging 
wages for making it more available or desirable. Does na- 
ture, sunshine, rain, soil, create wealth? No, they cannot, 
as they charge nothing for their service. Does not land 
contribute to it? No. Land grows utilities, its work is 
without charge. The products of land become wealth by 
reason of the landlord's charge for them. Is the destruc- 
tion of a forest by fire "consumption?" No, it is waste. 
Consumption means use. Is a railroad wealth? Yes, 
tracks, grades, tunnels, cars, equipment and buildings are. 



68 RIGHT AND RICHES 

They are consumed through use and must be renewed. Is 
a city lot wealth? No. Are lots not turned out and put 
on the market? Lots are not an output. They are not 
changed from their places and nature, are not consumed. Is 
corporation stock wealth ? No. It has not utility to be con- 
sumed. 



I 




CHAPTER V. 

CaPITAI,, lNCRi:AS^ AND INTEREST. 

HAT is capital? Capital comprises all wealth, of 
which the enjoyment is being deferred that it may 
increase in value or be used to facilitate output of 
wealth. Capital is of two classes, STOCK and 
EQUIPMENT. 

What is STOCK? Any material accumulation in any 
kind of industry from which a final supply to consumers is 
to come is called Stock. Seed, ores, wood, coal, animals, 
growing crops, grain for milling, fibres for spinning, logs 
for sawing, are crude stocks. Flour, boards, thread, leather, 
pig iron, lime, etc., are slightly developed stocks. Bread, 
furniture, clothing, shoes, stoves, etc., are manufactured 
stocks. Dry goods, hardware, millinery, etc., are merchan- 
dise stock which only lack selling to users. When bought 
by users, these things cease to be stock. 

Equipment comprises any wealth which is being used to 
handle stock, to move, plant, cultivate, clean, separate, com- 
bine or otherwise manipulate it. Plows, wagons, horses, 
cars, ships, machinery, bridges, barns, warehouses, shops, 
fixtures, etc., when used in industry are Equipment. Cap- 
ital consists solely of WEALTH. Capital is comprised only 
of stock and equipment. Land, notes, bonds, franchises, 
mines are not capital. Neither credit nor money is capital. 
Nothing but wealth is capital, and only that wealth which is 
at the time devoted to increase in value or to assisting out- 
put, which constitutes either stock or equipment. Capital 
depends on TIME for its effects. By allowing sufficient 
time many natural and chemical changes take place in stock. 
Animals and crops grow, wood seasons, chemical action sep- 

69 



70 RIGHT AND RICHES 

arates various elements and combines others. Time is re- 
quired to manufacture and move stock. 

Equipment is made effective only by time. A mill will 
saw so much lumber in a day, a machine will press but 
so many brick, a ship or car will travel but so far with its 
load. 

Stock and equipment are effective in proportion to the 
time they are applied. Here is the origin of interest. While 
wealth is capital, while it is being used as stock or equip- 
ment, it may not be devoted to enjoyment. One wishes to 
enjoy at once whatever he has. The poor child hastens to 
buy candy with the dime someone gives it. The adult has 
the same impatience, but perhaps under better control. What 
woman is not anxious to get her new dress home, or what 
man is not anxious to try his new gun? But adults are 
guided by reason. They will give up one thing if they are 
offered something equally suitable instead. They will de- 
fer enjoyment if the consideration is sufficient. The child 
will eat the apple green. The adult waits for it to ripen and 
thereby gets much greater pleasure. Interest is the price 
received by owners of wealth for waiting. Interest, like the 
price of anything, is the compromise between desire and 
hindrance. The desire for capital is for its advantages in 
industry. The hindrance to its use is owners' aversion to 
waiting. Owners seek as large a rate of interest as pos- 
sible, but users will pay as little, obviously they can pay no 
more than the increase they can secure by use as stock or 
equipment. It is mistakenly thought by some that the aver- 
age natural increase is the current rate of interest. 

The origin of the word capital is from the Latin caput or 
head. The greatest capitalists of old were owners of herds. 
They counted their wealth by the head. Cattle on the 
boundless range is yn ideal example of capital. In early 
days on the Western plains a few cows were a capital which 
speedily grew into a fortune. The owners were compelled 



CAPITAL, INCREASE AND INTEREST 71 

to abstain from killing or marketing them in order for the 
herd to grow. 

Thk Law o^ Interest. 

Interest is that part of the increase of wealth accruing 
to owners or lenders from its use as capital — as stock and 
equipment. 

Lending is but one way of getting interest. The most 
extensive way is to apply it to industry and get the natural 
increase. Borrowing and lending is a dangerous method of 
applying wealth to increase. The lender of capital, on the 
average, simply gets a part of the natural increase. Henry 
George seemed to think that this "increase" was limited to 
natural growth, as of vegetation or animals. He very clear- 
ly showed the fallacy of the old school conception of interest, 
which regarded as interest the increased product which labor 
was able to turn out, when supplied with tools or machinery, 
over what it could produce without them. Then he went to 
the other extreme and concluded that there is no power of 
increase in tools, machinery, etc. 

Let us see. Suppose we resort to the useful illustration 
of the small community, a hundred workers on an isolated 
island. The only timber on this island is away up in the 
mountains, inaccessible by wagon. The only means of get- 
ting it is for some of these workers to carry it down on 
their shoulders, or perhaps on the backs of burros, at a cost 
of tremendous labor. Thus while abundance of timber is 
in these mountains, this community is limited to a very 
scant supply. After suffering from this scarcity for some 
time, they arrange to set ten of their number to building a 
flume, compensating them therefor from the produce of the 
remaining ninety. 

This flume when completed is capital. It gives an annual 
increase in wealth in wood, lumber, etc., of perhaps five 
hundred per cent, of its cost. In other words, their new 

6— 



73 RIGHT AND RICHES 

supply of wood would have taken by the old method the 
labor of more than half their number, whereas now it takes 
that of but one man. Or suppose that they had procured 
their water by carrying it a long distance and now dig a 
well. This well-capital gives them an increased supply of 
many hundred per cent. Or suppose that by building a sea- 
worthy boat with the labor of ten of their number for some 
months, this boat-capital now allows them to procure in- 
creased supplies of fruit, fish, animals, eggs, etc., from the 
sea and the adjacent islands. Does not the wealth invested 
in the boat give a natural increase for interest as truly as 
though devoted to growing such things? To society, the 
rate of interest by such facilities is commensurate with the 
increase of output. 

But boats and flumes do not give to their owner a rate of 
interest in proportion to what they furnish supplies in excess 
of what could be carried on men's backs. A modern sawmill, 
cutting perhaps several thousand times the lumber per em- 
ploye that would be cut by a handsaw, has not interest effect- 
iveness of several hundred thousand per cent, to its owner, 
but perhaps only five, or six, or seven per cent. Here is 
the vital point which Mr. George tries to explain by the 
theory that the exchangeableness of wealth averages inter- 
est, and therefore the "mill wealth" takes Up its average 
share of the "increase power" contributed to the whole sum 
of wealth by vegetable and animal growth. 

But there is not an averaging or leveling in the natural 
increase of output given by capital in various enterprises, 
whether we count the output by volume or value. This 
natural increase varies without limit in various enterprises, 
but it does not all accrue to the capital owner as real in- 
terest. 

The capital owner often gets but a small part as interest. 
He must usually divide this increase with the owner of 
"concession," that is, the owner of the land, franchise, etc., 



CAPITAL, INCREASE AND INTEREST 



73 



on which the enterprise depends. Obviously, then, the aver- 
age rate of natural increase, or natural advantage from the 
use of capital is not the same, nor has it any approximate 
ratio to the average or current interest rate. Hiis is a vital 
point in economics. What, then, is the basis of the current 
rate of interest ? 

The demand for equipment and stock— capital— arises 
as we have just stated, from the real creative increase power 
of capital. Those having use for it get it from those who 
v^ill furnish it the cheapest, hence: 

The current interest rate is the compromise agreement 
between accumulators of zvealth and those who seek tt to use 
as capital. 

The accumulators of wealth will refuse to save it up 
defer its enjoyment, below a minimum rate, depending some- 
what on how much it reduces their subsistence expenditure 
below their "standard" of living. Hence, the rate of in- 
terest, paid to capital, invested in the most productively ef- 
fective equipment, is no more than in the most common 
essentials of industry. A sailing ship, on the average, even 
to-day, pays as good profit on the amount invested as the 
most modern steamer. The share of output which is the 
result of the use of capital is the increase of output caused 
by the devotion of wealth to purposes of increase; whether 
as seed for planting, stock for growing, machinery or equip- 
ment, ships, railroad rails, ties and cars. All true capital 
gives a real increase from which interest is paid, and as cap- 
ital may be augmented or replenished from the general fund 
of wealth, there is a leveling or averaging of the rate of in- 
terest of wealth devoted to every purpose. 

But may not any property in any use pay interest? In 
the common use of the term, yes. One may pay interest on 
the price of a piano or a watch, used alone for pleasure or 
for the price of land. This should be termed fictitious in- 
terest. All property is exchangeable. A cow may be ex- 



74 RIGHT AND RICHES 

changed for a dress, money for merchandise, credit for 
money or machinery. Now interest for capital is based on 
the time it is used and its VALUE, on the amount of wealth 
or value comprised in the capital, and not on its utility. 
Ten men may each borrow a thousand dollars' worth of cap- 
ital to use in ten different branches of industry. Each pays 
the market rate of so much per cent., irrespective of what 
it increases output. Because a steam thresher threshes out 
thousands of times the grain that could be threshed in the 
same time with a club, that does not determine its interest 
value. Its interest \alue is based on how much wealth it 
comprises, how much value it is postponing the use of. A 
brush not worth two cents, dragged over a field, may do the 
work of a thousand hoes, yet not be capital. The lenders 
do not care whether threshers, railroad cars, or printing 
presses are procured with what they lend. They expect so 
much interest each year for each hundred dollars value. In- 
terest is the price of deferring. It is paid out of increase. 

If one has property which specifically may not be ap- 
plied as capital — as stock or equipment — he may readily ex- 
change it for the same value of real capital; hence, if he 
lend it to another or sell it to him to be returned or paid 
for in a year, he will expect the same interest that he could 
have received by exchanging it for real capital and letting 
it be used in industry. Governments formerly were heavy 
payers of fictitious interest with taxes wrung from their sub- 
jects. Money is not capital, because on the average it neither 
grows, nor causes to grow with lapse of time. 

There must of necessity be a fund accruing to pay in- 
terest; people cannot pay interest very extensively unless it 
is accruing from what the d^bt was incurred for. Deferred 
payments for land are the greatest source of fictitious in- 
terest. But the land may pay rent. The borrower looks 
to a particular species of wealth when he borrows — certain 
tools, engines, structures, which will facilitate production. 



CAPITAL. INCREASE AND INTEREST 75 

A stock of a certain species of goods whose value is being 
made greater by being shipped to another place or by being 
retailed to consumers, is capital. Only a fraction of capital 
is borrowed. 

An increase of capital in a community or nation tends 
to increase the abundance of subsistence for all, hence its 
use should not be discouraged by capital being taxed. 

But the effects of Time are not alone to increase or im- 
prove wealth but to destroy it. When any natural deposit or 
resource is moved, modified or changed from its natural place 
or condition to make it more useful, from that moment it 
must be cared for and further improved until ready to be 
consumed, or time will begin to destroy whatever value is 
promoted in it. Time is a destroyer as well as a producer 
of Wealth. This tendency to decay is one thing that dis- 
tinguishes wealth from concession property. 

Time does not destroy, but renews Natural resources. 
Cut timber rots, quarried stone slacks, mined coal becomes 
useless. Loss and destruction also come unexpectedly and 
take wealth away, so that by deferring use we may forever 
lose it. Risk therefore joins with impatience to increase 
owners' reluctance to defer use. Good government reduces 
risk and thereby promotes accumulation of capital. 

Capital is one feature which distinguishes civilization 
from barbarism. This is both because Capital contributes 
to civilization, and because civilization eliminates enough 
of the risk of loss to encourage large accumulation of cap- 
ital. Capital in the United States to-day is perhaps safer 
from violence than it ever was anywhere, at any time be- 
fore. This is one of the many objects of government. But 
much yet remains to be done, not in protecting wealth from 
violence, but from the processes of manipulators of finances, 
stocks, and real estate speculation. 

No credit is capital. Credit which represents the price 
of stock or equipment constitutes a quasi-ownership of such 



76 RIGHT AND RICHES 

capital which we might term LATENT TITLE to capital. 
This Latent Title of the creditor is subject to the active, 
apparent, title of the borrower. But credit for which the 
debtor received no real capital, but only land, personal con- 
sumption, or loss, has no relation whatever to capital. 

Real capital increases the actual supply of wealth in the 
community. This is the class of capital usually considered 
in economic study as capital. 

Wealth increasing in value or contributing to the in- 
crease or creation of other wealth is actual Capital. Noth- 
ing but wealth can be Capital. Crops growing, goods in 
transit to where their value is greater, materials in process 
of improvement in shape or quality, are capital. 

Much confusion has grown out of misunderstanding the 
function of capital. It was formerly said to be to supply 
stock and equipment to be used in the work, and a fund to 
pay wages called a wage-fund. Modern economists of any 
discernment see that capital does not supply a wage-fund. 
That fund is continually produced by workers. The pro- 
prietor of the producing concern exchanges another form 
of property to the workers from time to time for their share 
of the product. This may be money, credit, or other mer- 
chandise. Whatever is so exchanged is called wages. The 
workers now have not more wealth, but it is of a kind more 
ready for their use. The proprietor has as much or more 
wealth, but must market it. A manufacturer finds at the 
end of a week an increase in value of stock by reason of 
work done on it, of more than $1,000.00. He buys this by 
paying the workmen $1,000.00 wages. Suppose he has stip- 
ulated that they should have so much wages ; that does not 
change the fact that they are producing them in the new 
wealth created. 

But it is argued that the manufacturer must have this 
fund to begin with, else he could not pay the wages. Do 
not all manufacturers get the money from week to week. 



CAPITAL. INCREASE AND INTEREST 77 

and month to month to pay wages, from the sale of goods? 
But grant that they do not sell the stock before pay day or 
before several pay days; that they must go on buying the 
workmen's share for several pay days, before entirely com- 
pleted or marketable output is furnished, what is this but 
buying an added supply of more nearly finished stock? Is 
it not common, usual, for stock to pass through many hands 
before completion? 

Suppose one is making articles of steel from steel bars 
which he buys; then he builds a rolling mill and rolls the 
bars ; then a furnace and makes the pig ; then ovens and 
makes the coke; then mines and digs the coal. Now is he 
not as truly buying coal when he pays the miners wages, or 
pig when he pays the furnace-men's wages, as when he for- 
merly bought such bars in the market. What appears to be 
a wage fund is rather a part of the STOCK FUND. Pro- 
duction is a continuous process. The Singer Sewing 
Machine Co. sells so many machines each year, and pays so 
much wages, just as truly as it pays so much wages and sells 
so many machines. The producer of food is continuously 
exchanging some of his stock for part of the stocks of fuel, 
fabrics, etc. 

The average opportunity to use capital profitably in man- 
ufacturing, shipping, agriculture or merchandising, deter- 
mines the demand for it. When such undertakings are 
profitable much capital is sought and interest is higher. 
When they are dull interest rates are low. When those 
undertakings are prosperous there is prosperity. Wages are 
also high. When interest is too low people refuse to devote 
so much wealth to capital. Some that has been so applied 
is consumed, some wasted. 

Wealth is like a stream. It flows from the springs of 
output continuously. There may be lakes or partially sta- 
tionary water through which a stream passes. Water taken 
from such places is the same as taken from the stream ; it is 



n RIGHT AND RICHES 

replaced from the stream. Some portion of wealth appears 
to be fixed. Buildings, bridges, etc., are quite durable. 
Some economists make much of this slight distinction. But 
where is wealth that is not deteriorating by either decay or 
change of style ? How much machinery, or printing presses, 
or ships, or railroad equipment of ten years ago, is of much 
value now even if as sound as new? Now, just as water 
is taken from a stream and diverted to turn a dynamo, so is 
part of this stream of wealth diverted at or near its source 
into capital. 

The water is taken from a certain Western irrigating 
ditch to produce electricity and then returned to the ditch, 
thus producing a considerable additional supply, pumped by 
the electricity from wells. 

So capital is returned to the stream of wealth augmented. 
Prosperity is increase in the output and enjoyment of wealth. 
In common parlance all property is, indifferently, called 
wealth and capital. The definite distinction seems impossible 
to many writers on economics. The distinction between 
wealth and land is very wide. Land exists naturally. 
Wealth is largely the result of human initiative. It is ac- 
cumulated for capital by the passive effort of humanity. If 
the whole supply of wealth were destroyed it could be al- 
most completely restored in a few months by effort and 
abstention. The supply of land continues as it has been. 
It may not be increased, but its price and the rent for its 
use increase with population and progress. He who pro- 
duces five hundred dollars' worth of wealth a year may con- 
sume but half of it and apply the other half as capital. 

There is perhaps three times the capital now in the coun- 
try there was ten years ago. There is no limit to the supply 
of capital that might be furnished, except the limitation on 
the opportunity to use it. 

Hence, Labor and Capital are the partners of Produc- 
tion. They are the human forces that change native ele- 



CAPITAL, INCREASE AND INTEREST 79 

ments into those things we desire. Interest is as just and 
meritorious a charge as wages. The payment of hberal in- 
terest helps replenish wealth. Accessage is the predatory 
charge. Any person, if he have opportunities, may labor 
and cause output of wealth. Any person who lacks capital 
may save it if he is producing an output. Laws which seek 
to limit interest on loans to a rate below the current aver- 
age abstention price of capital are not only ill advised, but 
futile. Reasonable usury laws protect the inexperienced 
from disreputable sharks. But liberal rates should be al- 
lowed, especially where payments may be made in monthly 
installments, and notes should never be taxed. 

The tremendous excess of the rate of increase from cap- 
ital, above the current rate of interest that is allowed the 
investing public, is not commonly observed. 



PART FOUR. 



Sharing of Output. 

Chapte:r I. Concession. 

11. "Living" Rates oe Interest and 
Wages. 

III. The Eminent Domain oe GreatEvST 

Eeeiciency. 

IV. The Consumer's Rights. 
V. The Producer's Rights. 

VI. Society's Rights. 




CHAPTER I. 

Conce:ssion, 

'Wly people are destroyed from lack of knowledge^ 

— Hosea. 

AVING examined the function of Labor and Capital 
in production, we see that they transform the re- 
sources of nature, assisted by science and the ad- 
vantage of social progress, into wealth and service 
for the satisfaction of desire. 

But we find that labor and capital do not receive as the 
reward of their service all, nor nearly all, of the product. 
There is a third recipient of output which, though it neither 
''toils nor spins," receives a share larger than either labor 
or capital, perhaps larger than both. This third claimant 
may be termed "Concession." 

In current works on economics the term "Land" is used. 
It is not by them restricted to agricultural or any particular 
class of land, but is meant to include such control as may be 
obtained of natural elements, to compel the payment for 
their use. 

This use of the word "Land" to designate such author- 
ity, seems to me to be not only confusing, both to reader 
and writer, but even with the meaning assigned to it by 
such authors, inadequate to cover the sharing of the third 
party to the division of output. It was adopted long ago 
when agriculture was of much greater relative importance, 
and when franchises and monopolistic property was of small 
relative consequence. 

"Concession" is a word which we have not seen used in 
this connection, but we need not use it in any other sense 
than that defined by the best dictionaries. The Century 
Dictionary defines Concede : "To grant, as a right or privi- 
lege; yield up; allow." It defines Concession: "The thing 

83 



84 RIGHT AND RICHES 

yielded; a grant; specifically applied to grants of land, privi- 
leges or immunities made by government to individuals or 
companies." 

"Concession" or "Concessions" include grants of land, 
by special enactment as a bonus to encourage the undertak- 
ing of an enterprise presumed to be of public benefit; pat- 
ents to land under a general law ; franchises permitting the 
carrying on of certain kinds of business. Franchises may 
or may not include the use of public streets, roads, or other 
spaces, but may depend on certain favor or patronage. All 
the above "Concessions" are definitely warranted or granted 
by direct assent of government. Besides these there are vast 
millions of dollars' worth of Concessions which are by "com- 
mon consent." 

The Century further defines Concede: "To admit as 
true, just or proper; to acquiesce in by silent acceptance." 
This class of concession is of vastly greater importance than 
is usually perceived. 

It is habitual to concede important privileges to persons 
simply because they have become established in their enjoy- 
ment. 

For example : Preferment in politics is often given to old 
citizens, or to descendants or relatives of those who former- 
ly enjoyed some privilege. Often this seems to result from 
the strange phenomenon of thought observed by Benjamin 
Franklin, that when one has once accommodated or be- 
friended a person there is a greater incentive to do so again. 
Castes rest on this strange influence. 

Again, courts recognize title by use. One may include 
an area of another's land in his enclosure for a certain length 
of time and acquire title thereby, or allow use of land for a 
road and lose title to it. 

Hence, concession is first by acquiescence of the people 
and second by grant of government. 



CONCESSION 85 

Acquiescence is the usual basis of authority. The power 
and domination of big corporations are greatly magnified. 
Trusts rest principally on the cowardice of the individual. 
The most ardent democrats will usually take off their hats to 
royalty. The enslaved masses are fettered by their fears of 
their supposed masters. They are made slaves by their 
acquiescence. If you can arouse in any class of oppressed 
humanity the incentive to be free, and get them to investi- 
gate, they will find their oppressors have no power save that 
conceded by the oppressed. Political bosses rule by this 
common acquiescence. This is a principle of economics 
more important than is at first apparent. Therefore, "Know 
the truth and the truth shall make you free." 

Current works on economics treat Land, Labor, and 
Capital as the three recipients of output. They say that 
Land receives Rents ; Labor, Wages ; Capital, Interest. As 
so considered, Rent, Wages and Interest embrace the whole 
product. For the purpose of comparison we shall call the 
share received by Concession for access to the opportunities 
it dominates either "Rent," or "Accessage." "Accessage," 
or "Rent," as here used, shall include what is commonly 
covered by the economic meaning of rent, and in addition, 
that vast revenue commanded by concession other than land. 

The most important form of monopoly is land; that is, 
the surface of the soil and the deposits upon or beneath it. 
The next in importance are franchises for railroads, tele- 
graph, gas, electric, and other service corporations, having 
permission to use public space or having eminent domain. 

Then there are such companies as banks, which enjoy 
the privilege of issuing currency, and other concerns enjoy- 
ing special privileges, patronage, subsidies or immunities. 
Much valuable property rests upon the monopoly enjoyed 
by concerns which perform a function which is a unit by its 
very nature, but not having any franchise, as commonly 
meant, such as the telegraph, express, sleeping cars, asso- 



86 RIGHT AND RICHES 

ciated press, etc. There is a tendency in this direction by 
ice, milk and many other businesses of supply. The con- 
centration of certain lines of business into a unit or monop- 
oly is as natural as gravitation. 

Production is the result of Capital and Labor applied to 
preparing and marketing natural resources. But production 
can scarcely begin before it meets a hindrance to the use of 
these resources. The producer finds that he has been pre- 
ceded by those who have laid claim to the native resources 
he must use and with whom he must make terms. The 
fertile land, the mine, the forest, the best positions along 
the trail and near the water supply are early appropriated. 

As towns and cities advance, these claimants advance 
their demands. Society, with its weakness for acquiescing 
in WHAT IS, has generally conceded even the most un- 
reasonable of these claims and confirmed them by grant or 
CESSION, thus giving to a few what is the birthright of 
all. 

When Robinson Crusoe was alone on his island, every 
tree, shrub, plant, animal or ^tone was rightfully his for 
his exclusive use. But had another party of, say, ten persons 
been cast on the island as he was, could he still have right- 
fully claimed everything to their exclusion? No. His 
stockade and bungalow and any other of his productions 
should have still been his. A small child could answer that 
question. But the harbor, land, trees, rocks and streams 
were as much for the use of the new-comers as for him ; and 
it would be a strange party with superior force that should 
not compel him to share them. 

But suppose another addition of 89 people, making a 
hundred in all, should their rights be less? 

Suppose then that they apportion the island, alloting to 
each a certain tract. Now when another person arrives 
what shall his rights be? Why not just the same as that of 
all the first hundred? 



CONCESSION 87 

To whom does Boston Common belong? To those in- 
dividuals who landed on Plymouth Rock, and died centuries 
ago? No, to every inhabitant or visitor of Boston when- 
ever or wherever born. To whom does Yosemite belong? 
To' whom does New York City rightfully belong? To 
every American, native or adopted; to Society, and society 
does not mean part of the people, but all of the people at 
all times. 

Concession consists of access to all or certain resources 
in a given territory to the total or partial exclusion of others. 
It may extend in scope over an acre or less, or over a State. 
That class called land title usually carries the exclusive 
right to all the resources of certain land for all time. Fran- 
chises are usually limited to the marketing of a certain kind 
of supply and are limited in time. Patents are only for the 
control of newly devised articles. They cover the whole 
country and are limited in time. Trusts, by combinations 
of advantages, control the market for certain utilities. 

Output is divided between three takers : Concession, 
Capital and Labor. Concession charging access; capital, 
interest; and labor, wages. Not according as they promote 
output, for there are but two factors to production — Labor 
and Capital. Concession does nothing to promote or cause 
output, yet it would be master in the division and have 
Labor and Capital take its termSi 

It is common for economists to class Land, Labor and 
Capital as the factors of Production, saying that for pro- 
duction land gets rent; labor, wages, and capital, interest. 

This is confusing and misleading. 

Rent is never paid to land but to a landlord, nor do 
landlords as such in any degree aid production ; as laborers 
they may, or as capitalists. 

The only intelligent statement of production is to limit 
it to two factors, labor and capital. 



88 RIGHT AND RICHES 

VaIvUe: Emanation. 

Value or property emanation is not production. The 
very entity of property is price, while the ultimate of pro- 
duction is satisfaction. Price hinders instead of helping 
satisfaction. 

Even as a factor of price-promotion "land" as soil, 
mine, or forest, is not certainly meant by such econ- 
omists, but its owner, who draws rent. Sunshine aids 
production quite as much as land, yet it does not . take a 
share of the crop. Owners of land by charging access do 
indeed enhance the cost, or hindrance to getting such things, 
with the result of greater price to the consumer. In truth 
the whole value of output in specific cases may rest on the 
landlord's charge. This does not make it his product. It 
simply gives the product value because it restricts it. 

He simply takes the whole natural growth as his rent, 
as his advantage of access to the land, his access fee. Now 
when we give a definite meaning to ''Production," we elim- 
inate the "concession man" from it as a factor. We then 
have two persons, the laborer and capitalist, producing from 
natural resources. Yet the product must be shared with a 
third person for simply being master of such resources. In 
practice the holder of concession often furnishes the capital 
required in production; in some instances he uses his own 
labor, but in this country to-day, perhaps more than half the 
output is taken by those who simply own the concession. In 
most cases they neither work, furnish capital, nor even 
superintend. Hundreds of millions are added to the cost of 
farm products as rent for lands ; to the cost of merchandise 
by rent of business sites. Occupants of city apartments pay 
landlords seldom or never seen. 

The Analysis of Property is as follows: 

Desire X Hindrance^Valuezz^Property. 

Hindrance=:Accessage paid concession -[-Reward paid 
for production. 



I 



CONCESSION 89 

Reward=Wages -[- Interest. 

That is, the three hindrances to output, wages, interest 
and rent, by Hmiting the supply, maintain the value of 
wealth. They constitute the Consumer's Cost. The con- 
sumer either directly, or through dealers and exchange, must 
ever pay the sum of these three elements of cost, or hin- 
drance to supply. 

The Essence of property is mental. 

Value is not in any degree in proportion to any material 
element, but is wholly dependent on desire and hindrance — 
''sought-afterness" and restriction, and the measure of the 
value is the measure of the property. So much value is so 
much property, the property being not the goods but the 
value of them. The property, or value manifested, in any 
quantity of goods is subject to the above analysis. Like 
the mercury in the thermometer value rises and falls, not 
from a force within things, but from a force without, the 
change of mental estimates of demand and offering. 

But on the average the value of commodities is their 
cost of output — the reward of production plus accessage; 
as on the average they may not be had cheaper, and no 
greater cost will continuously be incurred than consumers 
will consent to pay. Consumers desire not coal but heat 
Coal is one means of supply. The Hindrance or cost of 
coal is the accessage paid to owners of coal land and rail- 
roads, plus the producers' reward — the wages paid workers 
at mining and transporting, and the interest due for equip- 
ment of mine and carrier. These two constituents of re- 
striction, accessage and reward, in varying proportions, 
comprise the cost of all wealth. 

Taking for example a bushel of wheat, of what is its 
value or cost made up? Its cost is the rent, perhaps half, 
and the grower's reward, half; or a city home, the lot is 
perhaps forty per cent, and the house sixty. Of the price 



90 RIGHT AND RICHES 

of the house, maybe thirty per cent, is accessage to owners 
of forests, etc. 

Now we must all admit the justice of rewarding those 
whose efforts have cared for the crop or fashioned the 
fabric for our use, but when we buy we must pay, not alone 
this reward, but added thereto the charge of them who have 
contributed nothing at all, but have impeded all output until 
they were paid toll. Though concession's revenues are with- 
out one scintilla of justification, yet the earned wealth that 
is taken as arbitrary charges is past comprehension. Con- 
sider that owners of all our coal, iron, lead, copper and 
precious metal mines ; all our agricultural land, oil wells and 
public service franchises are absorbing the enormous rev- 
enues which sustain their values, and returning practically 
no compensation to producers and society who confers them. 

No one can get the smallest amount of property without 
either earning it or taking it from others. 

But we hear it argued that the owner was early to get 
such well located lot before the city grew. He should reap 
the reward of waiting; yet have we not, everyone, waited 
since we were born? 

Nothing has less merit than priority. If I am first out 
on the street in the morning, should all turn aside for me? 
Is there even any justice that he who rides in a street car 
from the terminus should get a seat, while he who gets on 
in the middle of the line should stand, though he pa}^ as 
much? A reserved seat is sold at a theater, on just prin- 
ciples. "First come first served" is a rule without equity. 

The farce of the superior rights of the old citizen, in 
politics, and preferment in general, is founded on the same 
false sentiment. It is a well-known fact that the later 
comers into a community are the ones who put life into it. 
When the mails came in the spring to Alaska, people would 
stand in line for hours and hours waiting. Twenty, forty, 
fifty dollars would be paid for a place near the head of the 



CONCESSION 91 

line. So we have, and so we will have, scrambles for wealth 
where priority is its price. But the man in the front of the 
line has done nothing to entitle him to preference. Should 
another door be opened and the line reversed no injustice 
would really be done. 

There is no justice in the rushes permitted to be made 
for land in opening new districts by the Government. Some- 
one hurrying to be first does the public, whose the land is, 
no good. Should a mob break into a store and carry off 
the goods the front fellow would be not less a thief than 
those behind him. Plainly to make people race for native 
resources is not intilligent. What value they have belongs 
to the public, and the public should receive a full compen- 
sation, and so with franchises. 

Busses are run in a street; the right of way is free to 
all, but some one of intelligence says: 'Xet's lay rails and 
put on cars and run them by electricity and carry people 
more cheaply, easily and comfortably." Yes, but who is 
going to get the privilege to do it? Every one may not 
have tracks on the same street as they had busses. So they 
go before the council and he who can use the biggest "per- 
suasion" gets the franchise. Now it is not wrong to have 
cars on the streets, but this way of deciding who is to do it 
is wrong. The franchise is of value to the public, and the 
public should receive its Natural Rent. When the public 
gets none it is robbed. 




CHAPTER II. 

''Living'' Rates o^ Interest and Wages. 

NDER the individualistic system, three recipients, 
Capital, Labor and Concession, take all of output. 
They do not all share in every instance. Some- 
times there is output without rent, sometimes 
without capital's use, sometimes without labor, sometimes, 
indeed, without either labor or capital. Grass grows with- 
out labor or capital, and is sold standing. Again the most 
inestimable services often require neither capital nor con- 
cession. 

Rent or accessage is that profit or income accruing from 
the control of land or other natiiral or social resource. 

Rent is not limited to a periodical payment in money or 
goods made by renter to owner, but consists as well in the 
profit income or advantage secured, by the owner's use of 
his own land. 

Wages are not limited to the narrow meaning of money 
paid to someone hired. Wages are any reward, however 
received, for active human exertion, applied to production 
or service. Under the most savage conditions they in- 
clude the whole output. The primitive hunter gets all the 
game as his wages ; the miner all the gold he washes as his 
wages ; the pioneer gets all the wood he cuts from the wild 
woods as his wages, all the crop he grows on the free land 
until the land assumes value and has ownership, or until 
equipment is used of enough value that the interest on it is 
worth considering. 

Interest is that part of wealth's increase which is given 
as a reward for deferring its enjoyment, whether paid to its 
possessor or to its lender. 

92 



"LIVING" RATES OF INTEREST AND RICHES 93 

Manifestly, one person may derive his income from one, 
two, or all these sources combined. He may labor on his 
own land and use his own capital. 

Under the economic meaning of wages, the salary of the 
railroad president is as much wages as that of the section 
man. The earnings of the greatest architect, chemist, 
painter, musician or actor are his wages. The owner of a 
great factory may derive his income: 

First, from the advantage which the ownership of the 
site gives — rent. 

Second, from the benefits of his work of superintending 
it — wages ; and 

Third, from the increase accruing to the capital repre- 
sented in the building, machinery, stock being finished, etc. 
— interest. 

Sometimes the whole product goes to Labor as wages, 
or to capital as interest, or to concession as accessage, but 
most commonly they all share in some degree. 

Now what are the laws which determine the share which 
each shall receive? Is there a scientific determination of 
this important question? If not, there can be no Science of 
Economics. Many theories have been advanced and have 
gained more or less adherents, but let us see if these are 
universal laws. We shall use the terms Rent and Acces- 
sage, and the terms Concession and Land, as synonymous. 

Let us first seek the law of Rent or Accessage. Rent is 
a charge for the use or advantage of land or other oppor- 
tunity ; land being the most simple or concrete form of such 
opportunities. Its possession must always give some ad- 
vantage before rent can be charged. A business lot in the 
heart of a metropolis may be worth to the user $1.00 per 
square foot a month, but as we go down the scale of busi- 
ness lots, we finally come to a grade which will only be 
used when rent-free. So in agricultural land, some is worth 



94 RIGHT AND RICHES 

$20.00 per acre or more rent, but a lower grade, by reason 
of remoteness from centers, etc., will only be used rent-free. 
Land of such value as to be used when rent-free, but 
for which no rent at all will be paid, is said to be at the 
"margin of rent." That is, the worker believes that the out- 
put will give him wages, but not enough more to pay any 
rent. If one cannot make an output on land which will ex- 
ceed in value the wages and interest he may otherwise make, 
he will not pay any rent for it. If he can make twice the 
amount of such wages and interest, he will probably give 
half the output as rent. Hence we have deduced the follow- 
ing law of rent: 

The rent which will he given for a piece of land is equal 
to what the output from it exceeds the current rates of wages 
and interest for the quantity of labor and capital used. 

An intelligent merchant is guided by this law. If he is 
offered one store room rent-free and another at $1,000 per 
month, he will take the latter if he considers he can make 
$1,100 more in it. A manufacturer will not take as a bonus 
from one city a building rent-free, if he can pay $10,000 
rent in another city, and make $11,000 more. This law 
variously stated is commonly acted upon. 

There are many very mistaken theories about rent, 
pretty generally held amongst real estate men and investors, 
and one is that rent and the consequent value of property in 
various cities is commensurate with the population. An- 
other basis of figuring is on the business of the city. Neither 
is in any degree to be relied upon. Prices of property and 
rates of rent in a city are more or less arbitrary, and de- 
pend principally upon the understood or tacit agreement 
among owners to make them high, and the degree of resist- 
ance on the part of tenants. Property is more likely to be 
high in a city where it is largely held by prosperous people. 
In cities where the lots are large with each residence, they 
may not be higher in price than small lots, where lots are 



"LIVING" RATES OF INTEREST AND RICHES 95 

generally small. Other things being equal, the rate of rent 
in a city is proportionate to the local expenditures of its citi- 
zens, or broadly, to their standard of subsistence. The 
prosperity of a city depends not upon the native abundance 
of material resources near it but upon the right thinking of 
its citizens. 

High interest, while wages are yet low, means that labor 
will be diverted from producing wealth for consumption to 
producing wealth for capital until an equilibrium is reached 
between wages and interest. High wages while interest is 
still low, means that labor will make little new capital while 
old may be used, but will be employed at producing wealth 
for enjoyment, and that laborers will become consumers of 
wealth more largely, thus tending to lessen the portion avail- 
able for capital ; that there will be greater demand for cap- 
ital to be employed in conjunction with greater demand for 
labor in production, which will tend to increase interest 
rates. Low rates for interest means slack industry; means 
that little labor will be employed in producing new supplies 
of capital. Every laborer getting good wages may partici- 
pate in the benefit of high interest rates by saving and in- 
vesting. Not so with accessage. The gas works, the tele- 
graph, the railroad, the express company, may increase their 
profits while both interest and wages are lowering. 

It must not be forgotten that wages mean not alone the 
stipend paid by employers, but the part of the output re- 
ceived by those who are their own employers. Some seem 
to think that high wages tend to limit output, but when 
wages are so high that employers might somewhat cut down 
the number of employes, will not products be in such de- 
mand that laborers may employ themselves ? History shows 
that the greatest output is coincident with the highest in- 
terest and wages. But if rents get too high, production con- 
tracts. Too high rents — all rents, tend to lessen output. 
This does not imply that high interest and wages always 



96 RIGHT AND RICHES 

tend to lessen the income from land or other concession. A 
large production means more to divide, and all parties to the 
division may receive more. But when excessive rents ab- 
sorb and consume, so as to stop industry; when that which 
replenishes capital is wasted; when the ultimatum of labor 
is refused, rent also drops. 

Labor and Capital, being the productive factors, are 
partners in the sharing of output, as Henry George has 
rightly stated. Here, however, we must begin to disagree 
with George's teachings, for they proceed to fix a certain 
share as rent, and then compute the joint share, the Reward 
of Production, by deducting rent from the whole product. 
We shall proceed to determine the shares of Interest and 
Wages separately, and then find the share of rent by sub- 
tracting their sum from the total output. Let us first as- 
certain the share of labor. 

The law of Wages is : 

The minimum wage in a given community is that rate 
below which workers will refuse to produce. 

This refusal depends principally on what it takes to 
maintain the standard of living that has become usual to the 
various classes of workers in that community. 

The law of Interest is like unto that of wages : 
The minimum Interest rate is that below which those ac- 
quiring wealth will refuse to save and devote it to repro- 
ductive use. 

This refusal is also based somewhat on the standard of 
living usual in the community. For people with small in- 
comes will, in one community, be content with meagre sub- 
sistence while they save for a low rate, simply because such 
standard of subsistence is common among their class there; 
while in another place it would take double the rate to in- 
duce them to dispense with the more costly living which is 
there common. 



"LIVING" RATES OF INTEREST AND RICHES 97 

We have now determined both Wages and Interest to 
be founded upon refusal to take less, and having determined 
them, we rnay now ascertain what is the share of rent, by 
deducting this sum from the total output. 

The share of Rent is : 

What is left after paying wages and interest. 

Let us try these rules on a practical problem — to culti- 
vate a certain piece of land requires ten workers and $10,000 
capital. With interest at 6%, and wages at $1.50 per day, 
the output will pay such Wages and Interest and leave, we 
will say, half the output for rent. But if there is such in- 
crease of wages and interest as to add 50% to the total Re- 
ward of Production, then but one-fourth of the output will 
be given for rent. And if the Reward of Production should 
double, such land would bring no rent. 

Hence, it follows that the ''Margin of rent" is where 
Labor and Capital will refuse to operate for less than all the 
output. 

Now George, so logical in most of his reasoning, here 
falls into the greatest error. He determines the rent of land 
to be that amount by which the output exceeds that of land 
at the ''Margin of rent," just as we do, but he fails ever to 
determine his ''Margin of rent." For his only definition of 
the "Margin of rent" is where land will pay no more than 
the Reward of Production, and his Reward of Production is 
the whole output at the "Margin of rent." Hence, he is but 
reasoning in a circle. 

He does indeed say that the "Margin of rent" is "where 
land may be had by producers free of rent," but is it not 
plainly obvious that no land may ever be had free of rent 
except simply such as will produce no more than the Pro- 
ducers' Reward? George determines Wages and Interest, 
this Producers' Reward, for the whole community, to be no 
more than can be made on this free land, this "no-man's- 



98 RIGHT AND RICHES 

land," lying loose in the commons. What a meagre re- 
ward ! It is only that of the Indian. 

Further, it is evident that in actual practice such land 
may seldom be had free, as it is taken up by speculators 
long before it is worth working. Nor can anything but 
remote relations be traced between wages in congested cen- 
ters, and distant places where land is free. Wages in St. 
Louis may average $2.00 per day, while but 30 cents can 
be made on the nearest free land. This ''Margin of rent," 
which under the present status of industry marks the rates 
of ''Living" wages and interest has no relation to "free" or 
unappropriated land, has, in fact, no relation whatever to 
land ownership, hut to the accustomed standard of living. 
The "Margin of rent" refers to a condition of thought, and 
not to areas or locations, not to some hypothetical grade of 
land which remains "uncornered." 

This doctrine of George's is not only unscientific, but 
fatalistic. It is the^ weakest point in the logic of this great 
man. It presumes an absolute authority and power in the 
hands of Concession Holders, which, like the laws of the 
Medes and Persians, cannot be gainsaid, instead of attrib- 
uting to them only such power as is conceded them. 

Correct Rkasoning Hopei^ui.. 

Education has created the widespread desire for wealth 
among us. Education increases desire as well as produc- 
tion. Education extends in many directions — in habits, 
tastes and appreciation. Educate the natives of Congo and 
how rich they will ]3ecome. Education is real or imaginary. 
We are getting some of the real kind. Much of the kind 
which has been called education was not education, but the 
worship of dead relics of a dead past. We want live edu- 
cation — a knowledge of principles — that does not wait when 
something good is proposed to be done, to ask: "Has it 
been done before?" "What did Caesar do?" The new kind 



*'LIVING" RATES OF INTEREST AND RICHES 99 

of education will not consult the attorneys of hereditary in- 
terest. Real education teaches of the Truth, "which is the 
same yesterday, to-day and forever." 

Neither destitution nor starvation can subjugate men 
who know their rights and have brotherliness enough to 
stand together to maintain them. 

"Poverty" has indeed followed "Progress." 

What is the remedy? 

More progress. 

Men were not constituted to exist isolated in the wilder- 
ness. The are brothers. When civilization shall have be- 
come enough civilized, men will be brave in the fraternal de- 
mand for what is their own. 

The resort to free land is but one of the least important 
alternatives of labor and capital. This is not denying the 
good effect of the extension of the area of production. The 
irrigation of the arid lands now progressing, means much. 
The drainage of swamps soon to be comprehensively started 
will mean a great deal more. It raises the standard of living, 
and so raises wages and interest. 

Greed is the greatest enemy of progress, but greed is not 
confined solely to the opulent. If all those who have one 
talent would not bury it, but would use it for humanity, the 
millennium would soon come. 

The true statement of the laws of Output's division gives 
hope. It puts the responsibility for wages on the workers. 
As they improve themselves, their wages will improve. In 
proportion as laborers as a class improve themselves moral- 
ly and intellectually, their condition will improve; for with 
this moral and intellectual improvement will come an in- 
crease of self-respect and independence which will raise their 
standard of living. When laborers put aside low ideals of 
value, that of spending for drink and other evil habits, or 
for sordid selfishness, there will follow better ideas of justice 
and fairness. "They will know their rights and knowing 



100 RIGHT AND RICHES 

dare maintain." While greed continues the motive of ef- 
fort, while men covet wealth that they in turn may dom- 
inate others, they shall themselves suffer from greed; for 
the "propertyless" class have the same lack of appreciation 
as have the rich, that the true value of wealth is the good 
we may do with it. What share of the product labor will 
accept depends on the laborers' incentive for a larger and 
better use of wealth, and their power to demand it. 

If workers and conservators of useful wealth may re- 
fuse less than a certain share of output, they are not then 
entirely helpless under Concession's demand for tribute. 
One evidence that producers have this power to refuse is 
manifested in strikes. No one will deny the energy dis- 
played in strikes even though they doubt their wisdom. 
"Proprietorism" has come to recognize their force, even 
though it disputes their justice or wisdom. 

Labor strikes are too familiar to all to require comment, 
but Capital strikes, though far more widespread in their dis- 
astrous results, are as yet a force generally unrecognized 
and misunderstood. Their dire effects are well known to 
all, but the attempts of popular "doctors of commerce" to 
diagnose them have been as erroneous as it would be to take 
indigestion to be measles. However much we may deplore 
strikes, it nevertheless remains a fact that the present meas- 
ure of wages and interest is determined by strikes. 

What is a CapitaIv Strike? 

In order to answer this question we must continually 
bear in mind exactly what capital is, and what true interest 
is. Capital is the nutriment of Commerce, and we must not 
confuse the lack of nutriment with a blood disease. Unless 
we really know what capital is, we cannot recognize its 
functions and effects, nor the source from which it comes; 
then how can we expect to understand the real nature of 
these periodic hard times which are nothing but commer- 
cial malnutrition? 



^'LIVING" RATES OF INTEREST AND RICHES 101 

George's misconception of the basis of interest clouded 
his treatment of this subject. His error, that interest rests 
entirely on animal and vegetable growth and increase, mis- 
led him to the conclusion, that the prevailing increase giv- 
en by capital depended on the amount of such growth ; that 
other forms of capital than those subject to such growth, by 
some mysterious means, took up or absorbed a share of this 
potency, through the exchangeableness of wealth, until all 
capital took on an average interest potency. In other words, 
his theory was that the rate or percentage of increase given 
by capital is the ratio which this animal and vegetable growth 
bears to the whole total of capital. 

This theory has been quite generally accepted, perhaps 
because it is so vague and mysterious, and so far from the 
simple facts. A magazine article in the summer of 1907 
laboriously explained the apparent shortage of capital as 
occasioned by the fact that manufactures and transportation 
interests were expanding out of all proportion to agricul- 
ture. But pray, what are transportation and manufactures 
but means to make products of the soil available? What 
tends more to such products' increase than the facility of 
transport ? 

When we start from the actual cause and measure of in- 
terest we miss all this vague, mysterious reasoning. 

We see that interest, like wages, is simply a compensa- 
tion for reluctance. That increase depends no more on ani- 
mal or vegetable growth than it does on transportation or 
education. Every species of wealth that facilitates output 
gives increase as much as does a herd of cattle, or field of 
grain, or orchard of fruit. Much confusion is engendered 
by the ''old school" proposition that "capital employs la- 
bor," and the declaration of later writers that capital only 
"adds to the effectiveness of labor," or that "labor employs 
capital." As well might we say that "modern plows and 
reapers add to the effectiveness of horses," or that "horses 



103 RIGHT AND RICHES 

employ reapers, etc., in agricultural work," as that labor em- 
ploys capital. 

The real essential entity of both Labor and Capital con- 
sists alone in the physical expression of human thought. 
Labor and Capital are equal factors ; neither employs the 
other. Capital is often employed without labor, and usually 
without any definite ratio to the labor employed. And labor 
is employed without any certain relation to capital. The 
ownership of herds increasing on the free public domain 
made many rich in the last quarter century. The whole out- 
put was practically interest. This was not through the use 
of capital by labor, or labor by capital. The labor of the 
cowboy was a mere incident. The cattle simply increased, 
and the increase depended on how many the owner had to 
begin with, and how few he disposed of, not on how many 
cowboys he had. Much language is wasted and much mis- 
understanding caused by making incidents into vital fac- 
tors. The definition of labor cannot, with any scientific 
sense, be made to include the laborer. Labor is the effective 
energy, either mental or muscular, which promotes produc- 
tion. The employment of capital in specific cases may be to 
entirely dispense with labor. We may intelligently say that 
industry or production employs labor or capital, or we may 
say that some person employs labor and capital. He may 
employ his own labor or another's, and his own capital 
or another's. It would be foolish to say that the section- 
men's labor employed the capital of the railroad, or even 
that the section-men employed it. 

The correct statement is that capital is employed by pro- 
duction. The old school proposition that laborers depend 
for opportunity to work, or at least to work effectively, on 
the existing supply of capital, and that their employment is 
limited in proportion to its amount, is too palpably incorrect 
to need much argument. Capital is but the physical means 
through which thought is applied to the production of sup- 



"LIVING" RATES OF INTEREST AND RICHES 103 

plies or service. The real essential entity of any item of cap- 
ital from a production standpoint— which is the only stand- 
point from which capital may be truly reckoned— is not its 
bulk, weight, cost, density, etc., but its productive effective- 
ness, its capacity to increase the sum total of human sup- 
plies. So true and vital is this conception of Capital that 
we should try to divest our thoughts of all other false con- 
ceptions. It is common to speak of improved machines as 
''inventions" in such expressions as ''there is a new inven- 
tion which produces many times the results." Is not a wheel, 
a plow, a steam engine, or a bridge each as truly an "in- 
vention" or idea to-day as when the first idea of it was put 
to the service of humanity ? 

What the great master, Henry George, means to bring 
out, is that laborers, if natural resources are available, may, 
by their work, increase capital without limit. 

Output of wealth is from three elements: First, re- 
sources—the natural material substances and forces; sec- 
ond, labor— the manipulation of these natural elements by 
human effort; third, the addition of sums of partly devel- 
oped wealth— stock— to the natural supplies— capital— and 
the manipulation of these "stocks" by artificially contrived 
engines or means — more capital. 

Hence, a small sum of wealth will accrue yearly from 
land spontaneously; a considerably greater output can be 
made to accrue by human hands unaided by implements of 
any value whatever; this is the increase given by labor; 
but with the addition of capital— reserved stocks and equip- 
ment—the output can be increased several hundredfold. 
How much more corn can be grown with modern imple- 
ments, than with a clam shell! How much greater com- 
merce is possible from the use of railroads and ships, than 
could be carried on men's backs and on rafts ! It is idle to 
call this increase an increased power of labor, for it is not. 
Education does give labor increased power, but this is some- 



104 RIGHT AND RICHES 

thing very different from capital, for the most educated 
labor is the least effective without capital co-operate with it. 
There is an exaggerated notion of the importance of labor 
as a creator of wealth. It is more scientifically correct to 
speak of production as the discovery than as the creation 
of wealth. We should learn that our supply depends not 
on how hard we work, but how rightly we think. 

The increase given by capital is perhaps hundreds of 
times that of labor. The important thing to distinguish is 
that only a fraction of this increase goes to capital-fur- 
nishers, as interest. A considerable part of it goes directly 
to the consumer in cheaper wares and the remainder goes to 
concession. Legitimate interest is always drawn from the 
capital increase, but its amount is not based on any ratio or 
percentage to such increase. 

Wages and rent both are also principally taken from this 
increase which capital produces. 

Wages to-day with us are many times the increase given 
by labor. The real increase actually given by labor would 
only support wild Indians. 

It is well to remember that the part of output taken by 
either recipient is not in any sense an approximate percent- 
age of such output. Interest is a percentage of the capital 
devoted, but has no approximate ratio to the output given. 
Wages have no relation to output. Wages are no more 
where the results per worker per day are $1,000 than where 
they are only $3.00. 

George says that abstention is but a negative factor ; that 
it can produce nothing. Quite true, but we are willing to 
pay to prevent things being consumed. We build fences to 
keep stock from eating crops, and pay policemen to prevent 
people taking our. good,s. Conservators of capital merit in- 
terest for deferring its enjoyment. Indeed here is the vital 
distinction between the equities of interest and rent, which 
George so persistently insists upon. If owners might, and 



"LIVING" RATES OF INTEREST AND RICHES 105 

were inclined to, eat up land, or eat up its vital forces which 
would not again develop for some years, then rent would 
be as just as interest. But owners can get no possible good 
from land except by allowing it to be used. So that what 
makes rent unjust i.s that they withold not alone what they 
need to use, but what they cannot possibly use. 

The effective results of capital are as much increase 
when they make wealth available or usable, as though they 
created it out of ''darkness and void." Does not the electric 
furnace, for practical import, create those things which were 
impossible to extract without it ? Why then does not a rail- 
road ''create" coal for a region which could have none with- 
out it? Surely the eifectiveness of capital consists in its 
increase, but the interest to its owner is a part, only, of this 
increase. Indeed there is no reason why its owner should 
get any of this increase but what justly compensates him 
for deferring its enjoyment. Capital in one instance may 
produce an increase of but 1 to 6% and in another 100 to 
10,000 fold, yet the owner does not (and why should he?) 
get more interest in one case than another. 

Let us repeat the simple law of interest : Interest is the 
smallest price for which those acquiring wealth will save and 
devote it to increase. In short, interest is the price which 
the proprietors of industry must pay for abstention. 

If you lend me $10,000, what is it to you what employ- 
ment I make of it? Whether I sink a shaft and develop a 
million dollar mine, or perfect an invention like the tele- 
phone, worth several millions, or buy cattle to fatten ; you do 
not charge me for what I get from it, but you charge me 
$600 per year for your waiting to use it; perhaps to build 
you a home. 

No more do wages refer to the results of labor. When 
I hire men to work for me for a month or a year, they rate 
their wages by their own reluctance, and not by size of 
product. If I am fortunate enough to get a big crop, or 



106 RIGHT AND RICHES 

other result, they are only interested in a friendly way. No 
less is it true from a selfish standpoint that wages are the 
price of reluctance to give time or toil when workers labor 
at their own enterprise. They are deterred from entering 
lines where the product will not compei^sate for their re- 
luctance. 

This does not deny the fact that wages are from product, 
yet they are ever but a part of output. This is true because 
no one except in isolated instances would have others labor, 
or devote his own labor, to an enterprise that did not pro- 
duce more than enough to recompense such labor. 

Labor seeks as wages returns to maintain its wonted 
standard of living, hence ''living wages," and capital seeks 
interest as a recompense for saving. Reluctance to save is 
influenced, as we have noticed also by the accustomed stand- 
ard of living. This has an important bearing on results; 
for labor and capital, thus basing their demands on their ac- 
customed needs, take little cognizance of a multiplying out- 
put ; hence Concession continues to give these ''usual wages" 
or hiring wages during advancing prosperity, and has left 
as its share, not only a multiplying quantity of wealth, but 
a multiplying percentage of output. This is the reason that 
rents and franchise dividends double up with prosperity, 
while wages stay so much per day, and interest so much per 
hundred dollars. Why the merchant and farmer pay more 
rent, yet are glad to make as much. Here is the source of 
the common phrase, "making a living." Concessionists don't 
figure to "make a living," they take "all the traffic will 
bear." 

The shares of wages and interest are in a manner fixed 
at so much money per day for various classes of labor, and 
so much money per year for each hundred dollars capital 
devoted. Especially is this so of wages paid as a periodical 
stipend, and of interest paid by borrower to lender. Interest 
is no more a percentage of output than wages are. 



''LIVING" RATES OF INTEREST AND RICHES 107 

One must figure the percentage of gain he is deriving 
from an enterprise, not by taking the ratio of his present 
pro-fits to his initial investment, but the ratio of present 
profits to the present value of his holdings in the enterprise. 
This is the current rate of profit. 

We must particularly observe that the present invest- 
ment is to be taken as the basis of profit deduction ; not an 
investment of long ago. That is, suppose one makes an 
initial investment of $10,000 worth of horses and wagons 
for draying purposes. At the end of a month, or a year, he 
should make a balance sheet and inventory of his capital. 
Perhaps the horses have increased in value, perhaps de- 
creased. Perhaps he has accumulated from the business 
more horses, wagons, cash or other forms of wealth until 
the assets of the business is $12,000 after allowing salaries 
to himself and other employes. He has then made 20% 
profit on his capital for a year. But unless he takes this 
$2,000 out of the business and devotes it to other uses, he 
will then have, not $10,000 capital invested, but $12,000. 
At the end of another like period it may shrink to $10,000 
or $9,000. Every business man does, or should, balance 
his business at least once or twice a year ; that is, in a sense 
"close it up and start over" by reinvesting the assets which 
the inventory and balance sheet show to be then on hand. 
The rates of profit must then be calculated on this rein- 
vestment. 

The profit through the use of capital is from the increase 
or reproduction which it gives. The rate of interest is but 
the part of this increase which the real furnisher of capital 
actually gets and not what it produces, for much of this in- 
crease is most commonly taken by concession. This is the 
vital point. Capital really invested in a gas plant might 
show a return to the investors of 20 to 30% if based on the 
ratio of annual income to real wealth assets. But here we 
must not forget our reinvestment rule. Its last balance 



108 RIGHT AND RICHES 

sheet may show real wealth assets 30% and franchise value 
70%. Hence supposing its capital be $1,000,000, what then 
is reinvested consists in $300,000 real wealth, and $700,000 
concession. Hence, seven-tenths of its income is accessage 
and only three-tenths real interest. 

The stock and bond issues of such companies are usually 
kept up to the total value of the wealth and concession 
assets combined. That is up to an amount on which the net 
income will be somewhere near 5%. If new capital is de- 
sired the investing public is asked to furnish it at this rate. 
That is, the public is asked to furnish real capital on such a 
basis that it will only get a fraction of the natural increase 
which the capital employed by the enterprise really pro- 
duces. Now what is the result of this? Simply that with 
a rising tide of prosperity, which comes periodically, the 
ample funds of capital are not offered a participation in this 
larger increase, but are offered stocks and bonds more and 
more attenuated as prosperity continues; more and more 
inflated in proportion not alone to the real capital actually 
employed, but even to the rates of income of such concerns 
until the public in large numbers refuses to buy. This ends 
in a panic in which such securities are suddenly ''deflated" 
which would be well enough were not honest values like- 
wise annihilated and the whole system of commerce thereby 
paralyzed. 

If it were not for this monopolizing of the benefits of 
prosperity by concession and the dishonesty of stock-jobbers, 
unlimited floods of capital would respond to the attraction 
of a bountiful increase in industry. . Holders of lands and 
franchises want others to furnish the real earned capital for 
all construction, and are only willing to give them 5%, even 
though the whole property pays 18%. 

The increase, or profit, in any industry on the original 
capital employed becomes accessage or rent to the extent 
that it exceeds the percentage the public investors may earn 



"LIVING" RATES OF INTEREST AND RICHES 109 

by investing in it on the basis offered them. If a gas plant 
costs $200,000 and pays $40,000 net per year, the public 
may only get in on a basis of about $1,000,000 capitaliza- 
tion. Hence this $40,000 is $8,000 interest and $32,000 ac- 
cessage. The opportunity to employ capital profitably is 
limited only by the restraint of concession. When a new 
device displaces much labor, its first tendency is to give in- 
creased output. The immediate results probably will be 
great profit to owners of such devices. Then there is a 
rush of wealth-owners to produce and operate such devices, 
and if not restricted by patent or otherwise, prices of 
product will fall proportionately, which brings the profit 
of such ownership down to the average interest rate. The 
next tendency is an increased accessage rate or rent for 
land, or other opportunities where it may be used, which 
boosts prices of output up to, or above, former prices. This 
is apparent in the tremendous increase in commodity prices 
and of rents coincident with industrial progress. 

Great claims are made for a new automatic gold dredg- 
ing machine. If it will, with nominal cost, extract gold 
from areas of sand, what will be the result? The first 
builders may make, as it is claimed, from one hundred to 
several hundred per cent, per annum, but how long before 
gold-bearing lands, where these dredges will work, will 
assume immense value. This is but a more simple illustra- 
tion of the appropriation of the increase given by all forms 
of equipment. Street cars are of no greater value with con- 
solidation of companies, and growth of patronage, but 
franchises are. 

Now as prosperity advances, this fixed or accustomed 
sum of money paid by. concession to labor and capital, this 
usual number of dollars, has a smaller and smaller purchas- 
ing power. Yet concession persistently refuses to give 
more than so much wages per day until threatened with labor 
strikes, and it as persistently refuses to give more than 



110 RIGHT AND RICHES 

four or five per cent, interest. Instead it increases 
stock and bond issues to the limit on which such per 
cent, can be promised. But owners of capital are not a 
segregated class as are union wage earners, therefore they 
are not organized. These furnishers of capital have other 
interests ; they are in most cases also laborers, or slight 
owners of concession. They do not send their business 
agent to demand more of proprietorism ; they do not say to 
Wall Street, "You must give us 7 or 8% or we will strike." 
No, they just quietly and individually strike. While this 
rebelling or refusing by savers proceeds quietly and unher- 
alded, its effect is as widespread as a labor strike, but it is 
insidious. Small sums of capital returning to investors, 
five, fifty, a hundred or ten thousand dollars, which before 
were hurriedly reinvested, are now hoarded or consumed. 
Owners now quietly refuse to put them again into trade or 
industry, until given more favorable terms. It is as truly a 
strike as that of labor, but it is individual, unorganized and 
unspoken. 

The important question is : 

Do strikes pay? 

Is simple, dogged, stupid, passive refusal, with its stop- 
page of output, an effective means of remedying too low 
wages or interest? The disastrous results of labor strikes 
are well recognized, but capital strikes have never been de- 
termined by a true diagnosis, but are called by the vague 
name of "industrial depression." They are usually compli- 
cated by a paroxysm of fear called a panic. The present 
rates of wages and interest are entirely determined by strikes 
which manifest the refusal of producers to take less than the 
minimum, concertedly fixed by labor, and spontaneously 
demanded by capital owners. But these strike-projectors 
make no attempt to attain anywhere near their Natural Re- 
ward. They strive but to maintain "Living Wages and 
Interest." 



''LIVING" RATES OF INTEREST AND RICHES ill 

The foregoing rules of 'Xiving Wages and Interest" are 
not based on immutable laws of truth; they are but a pre- 
sentation of the jangling contentions of selfishness which 
obtain in the prevailing status of industry. Heretofore re- 
formers have not even attempted to define an infallible 
standard of true Wages and Interest. 

Without a scientific determination of the true measure 
of such rewards, how shall we know how much we should 
expect? How shall producers know how much they lack 
of receiving their just compensation? 

The prevailing Rules of industry are diametrically op- 
posed to the Golden Rule. 




CHAPTER III. 

The Eminent Domain o^ Greatest Eeeiciency. 

''One only master grasps the whole domain; 
And half a tillage stints thy smiling plain." — Goldsmith. 

OUNTLESvS millions flow into the coffers of con- 
cession yearly from the control of land, franchises 
and other forms of monopoly. No property ex- 
ists without labor or privation endured, or to be 
endured for it. Value, the essence of property, is the posi- 
tive to a negative suffering. Utility is not. The most es- 
sential blessings come unearned, but property means the 
power to command service. Every dollar received for rent 
of priceless business sites, for fertile field or mine, for divi- 
dend earned on franchise privilege, represents labor or de- 
privation. Who are the losers of this vast revenue? Does 
it mean the ''hire of the laborer kept back ?" Does it mean 
overcharge to the consumer? Does it mean the despoiling 
of society of her property? It may mean either or all. 
From whence does this unearned wealth come? The 
answers heard to this question are many. 

If workers do not deserve, nor even ask a wage com- 
mensurate with output; if owners of Capital when fixing 
the rate it shall demand as interest, take no cognizance of 
the amount of increase resulting therefrom; if concession, 
because it contributes nothing, has no right to any share 
whatever of output, to whom then does accessage rightly 
belong? It irrefutably belongs to Society. 

What, then, is the Natural Estate of Society? 
What is the Natural Reward of Producers? 
What is the Natural Price to Consumers? 

112 



THE DOMAIN OF USE 113 

What are the Scientific Rates of Wages, Interest, Rent 
and Taxes? 

First, let us particularly distinguish these classes of 
humanity. It is common to assume that consumers and so- 
ciety are practically identical, and in loose conversation to 
say that everyone is a laborer, and even to designate those 
who dominate the earth's property as simply stewards for 
the people. But distinctions of these classes are radical and 
essential to a consideration of economics. 

All people are consumers, and all people are society, but 
this does not constitute consumers and society as one class, 
for very important reasons. First, because, if society means 
anything, it means God's children — all having equal right 
to inherit the blessings He has provided for them. 

Now consumers do not stand to each other in any rela- 
tion of equality, for they do not consume equally. Some con- 
sume millions, others but dollars. Not only in quantity, but 
in quality is this difference. A large share of the output of 
wealth is of a quality and kind, the use of which is almost 
unknown to the masses. What interest has the person 
working for a starvation wage in the price of sealskins, 
diamonds, cut glass, expensive laces and such things which 
he does not hope to ever own. Hence, what cheapens prices 
of things indiscriminately does not benefit the masses in 
proportion, but only what cheapens what the masses use. 
In other words, an average cheapening of prices does not 
counterbalance a reduction in wages, and a raise of prices 
in general does not take from laborers the benefits of in- 
creased wages. Neither do prices advance as a result of 
advanced wages in the ratio of the advance of wages. 
Neither is the 'laboring class" in its broad economic mean- 
ing anything near equal to society. No doubt three-fourths of 
the wealth produced is consumed by others than laborers 
and their dependents; by those who absorb instead of pro- 
mote. Hence, the importance of keeping clear the interests 



114 RIGHT AND RICHES 

of producers, consumers and society. You may own a few 
shares of stock in the IlHnois Central Railroad. Yet if it 
owe you ten thousand dollars, you do not say, "let it go, 
it's all in the family," that to collect it would be taking 
out of one of your pockets to put into the other. No, you 
say "my interest as a stockholder is slight compared with 
my individual interest." 

Society includes not alone the millionaire, the independ- 
ent middle class, and the skilled and effective mechanic, but 
helpless infancy and age, the invalid, imbecile, the cripple, 
the blind. All have claims on her. 

Is a definite analysis of the rights of these classes pos- 
sible ? 

The press and platform are burdened with discussions of 
monopoly and "trust." The rich become richer so rapidly, 
they are bewildered with their wealth and know no remedy, 
yet destitution cries for relief. If these errant streams of 
unwieldy wealth may be traced to their real sources they 
may perhaps be returned to their native channels. This is 
the great problem of to-day. 

It is plainly evident that the consumer is plundered. Any 
housewife can testify to that. The advanced prices of com- 
modities in the face of cheapened methods of output prove 
that. 

It is quite evident that the slight advances of wages are 
but a fraction of what increased product would justify. 

The great problem confronting the officers of every com- 
munity is to make the revenues meet the needs to carry on 
the urgent public work. 

Surely, then, the laborer, the consumer and society are 
all deprived by Concession. But in what proportion? To 
determine this v/e must first determine the native rights of 
producers, citizens and consumer. 

What is the NATURAL REWARD of the producer? 

What the inherent interest of Society in output? 



THE DOMAIN OF USE 115 

What the natural legitimate price to the consumer? 

There is a wide lange of opinion as to what is produc- 
tion's Natural Reward, There is a radical class who claim 
the whole product as the producer's reward. Some aver 
that the whole product should go to the laborer as wages. 
The other extreme view held is that natural wages and in- 
terest is what the market affords, what competition de- 
termines ; in other words, what is now paid. The un- 
reasonableness of the first class in general causes the ac- 
ceptance of the view of the last w^ho have the argument 
convincing to many that what is, is right. If higher prices 
of commodities, as our protectionist friends teach, tend to 
make wages proportionately higher, what is the harm of 
higher prices? If producers merit the whole product, what 
interest have we as citizens, and not producers, in the ques- 
tion ? On the other hand, if Accessage is the charge for 
what rightly belongs to Society, wherein is the producer's 
cause for complaint? As a matter of fact, a large class of 
producers take this view. As producers, neither laborers 
nor capitalists are liable to give much thought to the re- 
striction of output — to what is added to the consumer's 
price by high rates and rents. Mr. Paul Morton in speak- 
ing of railroad rates says : 

"The people— the consumers — must be protected against ex- 
tortionate rates imposed by the railroads. I say the people, 
because the shipper, who is often a middleman, is not so much 
interested in keeping rates fair. The shipper does not want 
discrimination; he does not want A to be given a lower rate 
than B; in short, he does not want rebates unless he alone 
can have them. The shipper's interest demands that he bring 
his goods to market at a no higher charge for carrying than that 
paid by every one of his competitors, to the end that they do 
not undersell him and put him to loss. There, however, the 
shipper's interest usually comes to an end. He wants all 
shippers to pay equal rates, with no favoring rebate discrim- 
inations to any one, so that all shall enter the market on even 
terms. The height of freight rates, so that they be equal is 



116 RIGHT AND RICHES 

not to him of prime importance. "With the man who buys 
from the shipper — the consumer finally — the business lies the 
other way about. The shipper, fixing his selling price, adds 
the freight charge to the original cost. The consumer pays 
the freight. The freight rate thus becomes an element in price- 
making. Wherefore, I repeat that, in order to protect the pub- 
lic, the consumer, the Government should, in all cases, whether 
interstate or otherwise, insist that freight rates shall be reason- 
able." 

We need not look to the renting farmer to reform land 
laws, nor to the employe of oppressive franchised corpora- 
tions to bother about reasonable service and rates. They 
are often better paid than the average worker and are care- 
less. Many declare that the natural scarcity of native re- 
sources give such resources their value, and that it matters 
not to workers whether society, or individuals, collect the 
rental. Very truly, the coal vein does not especially belong 
to the user of the pick, nor the forest to the wielder of the 
ax. The tendency of the producer, the business man in 
general, is to underestimate his rightful reward. It is the 
theorist, the talker and writer who exaggerates the pro- 
ducer's natural share. In the most primitive state of in- 
dustry the producer naturally gets the whole output as his 
reward. This is his Naturai, Re;ward^ where there is no 
preference in sources of supply. 

But such a condition cannot be found where production 
has advanced beyond the most primitive stage. Only in 
the most remote districts will a producer find resources and 
conditions on equal terms to all. We may imagine that one 
savage has a right to hunt or fish equal with every other 
of his tribe, or to plant a few hills of corn, or gather wild 
growths. 

With the first steps of real industry, however, we find 
producers appropriating quantities of native supplies and 
setting up exclusive claim to the use of certain privileges. 
The placer miner goes to work washing out precious metal 



THE DOMAIN OF USE 117 

from the field of sand. At first the number of miners are 
few and all work in common as neighbors. But as the in- 
flux of gold-seekers begins, they stake out their claims to 
areas of sand and inches of water. The new-comers find 
the opportunities restricted. The most primitive agriculture 
recognizes the advantage of the specially fertile valley. The 
smallest village has a corner or point of especial value. 

Here then is the radical error of the ''historical" school 
of economics. It does not recognize this evolution of value 
in the control of the peculiarly advantageous positions by 
producers. The honest workman with all good purpose 
takes possession of a tract of land on the bank of a stream 
which he proceeds to use, cultivating some and pasturing 
stock on the rest. He needs to cross the stream occasionally. 
Hence he rigs up a rude boat. Others wish to cross. He 
carries them for honest fare. What is wrong with such 
conduct ? Nothing. But this travel increases ; dozens, then 
hundreds wish to cross the stream there. For a rental he 
permits a store to be built. Then he leases the ferry privi- 
lege. Then other lots. The travel increases to thousands. 
A city grows. Our workman is no longer a workman. He 
does not live by his wages but from tribute paid by the 
growing population for access to the advantages of which 
he got possession. He did not create them. He simply 
happened along where they were. Thus the Vanderbilt 
fortune grew. 

How many schemes of philanthropic colonization, how 
many co-operative schemes of business have come to grief 
through lack of recognition of this insiduous power of do- 
minion. Many colonies have gone into the remote wilderness 
thinking the members and their descendants would be free 
from domination of a hated aristocracy, but how soon has 
the same class arisen among its own members based on the 
power of appropriated resources. 



118 RIGHT AND RICHES 

Plainly, then, we cannot arrive at justice by the lazy 
methods of present and past practice; by letting the pro- 
ducer have absolute ownership of the area he appropriates. 
Let us then take as our postulate and foundation law of all 
justice: that society is the primary owner of all output; 
that the individual acquires just ownership only as society 
in equity grants it to him. 

''Know froTn the hounteous heavens all riches flow, 
And what man gives, the gods hy man bestow.''' — Homer. 

The correctness of this postulate is made more evident 
by the fact that producers do not claim a reward propor- 
tionate to output, but only sufficient to maintain their ac- 
customed standard of living. They ask only for Living 
Wages ajtd Interest, but they are ever seeking for larger 
opportunity to produce. 

It is the self-evident duty of Society to procure the best 
possible 'living," the largest possible supply of wealth, for 
her members in the aggregate ; we need not at present in- 
quire as to its apportionment. Output is from three ele- 
ments, Resources, Accumulated Capital, and Human En- 
deavor. Then if Society has an inalienable right to all Re- 
sources, which cannot be questioned, what m.ust she do to 
secure this Greatest Possible Supply? Manifestly she must 
secure to the ever-willing producers a scope of opportuni- 
ties or resources so broad and rich as to admit of the high- 
est possible efficiency from the efforts of all. 

There is a story of a modern ship being stranded on a 
fertile but uninhabited island. It was conveniently loaded 
with a quantity of seeds, machinery, and other useful stock 
and equipment for starting industry on the island. Now 
suppose you were governing such a colony thrown upon 
such u^>claimed field. Suppose you thus commanded 100 
producerb ^^d were responsible for their best subsistence; 
would you not carefuly select for operation the most choice 
resources which such island afforded? First of all you 



THE DOMAIN OF USE 119 

would select as a place for your little city or settlement the 
best possible site, and not some miserable swamp, as is often 
the site of cities. You would give careful attention to plan- 
ning the best arrangement of such city. You would then 
put your woodsmen to work on the choicest trees, your 
plowmen on the richest soil, your fishermen would be di- 
rected to where the catch was most valuable, your quarry- 
men would take the most available stone. You would not 
let a man work at one place when he could produce twice 
the results at another. Moreover, you would try as much 
as you could to let the builder build, and keep the smith at 
the forge, instead of compelling them to do that for which 
they had no aptitude or taste. In other words, you would 
seek to have continually the largest possible use of the re- 
sources of the whole island. Hence you would not tolerate 
that one person should appropriate and control the best 
timber, water supply or boat landing. 

Even so should Society do, "that it may give seed to the 
sower and bread to the eater." 

Society should guarantee to all producers the best re- 
sources possible. Or stated conversely: She should assert 
her right to guarantee that the resources should be used 
to the highest possible efficiency. To this end she should 
assert her title to that scope of the best quality of resources 
" needed for the fullest use of all workers, so that no one need 
work with opportunities inferior to any opportunities that 
were idle. 

A railroad has the right to take by condemnation what- 
ever property is needful to its most efficient operation. Why 
should not all producers be given this same right, the ac- 
cess to the most efficient means of production ? 

It has ever been recognized that the State has the right 
to take what is needful for it to use for the best interest of 
all. This right is termed Eminent Domain. The State 
delegates the right of Eminent Domain to railroads. Why 



120 RIGHT AND RICHES 

not to all producers? Giving this eminent power to one 
class only, gives it authority over all others. Is it anarchy 
to deny the right of an industry to shut down and leave its 
thousands of employes idle and helpless? Even Russia has 
prohibited such closing of works. 

Should producers of every class have the right to appro- 
priate the* use of the best resources needful to the largest 
output, we might term this the "EMINENT DOMAIN OF 
GREATEST EFFICIENCY," or "The Domain of Use." 

The apprehension of the nature and import of this zone 
of opportunity is the first step in the solution of our prob- 
lem. The vital principle involved in the extent of this do- 
main is the only solvent by which an analysis may be made 
of the tribute taken by Concession. Hereby we may isolate 
Preclusion, that blight equally ruinous to producers and 
consumers. As the extent of Preclusion is the extent of the 
consumer's overcharge, and also the extent of labor's dep- 
rivation, we may thus deduce what would constitute Nat- 
ural Prices and Natural Wages. We shall further learn 
that the marginal line of this Domain on which all may find 
opportunity to produce with the highest efficiency, is the 
MARGIN OF NATURAL RENT. 

The whole problem is practically solved when we realize 
how small a fraction the present results of industry are, 
with producers operating on inferior resources, of what they 
would be, were all workers and all capital employed with 
the most effective opportunities. It is amazing to compre- 
hend how, under this rational management of opportunities 
"of the people, by the people, for the people," both the 
supply of consumers and the reward of producers might be 
multiplied, and with only a fraction of the effort and ab- 
stention now endured. Yet this emancipation of mankind 
is prevented only by the wanton preclusion of the use of 
rich opportunities which are now held idle. 



THE DOMAIN OF USE 121 

If owners of opportunities allowed their fullest use and 
took only the premium which preference is worth, they 
would not then dwarf production to a fraction of its nat- 
ural output, nor would a given area of resource have its 
present intense rental power. We may illustrate this by 
the power of a stream flowing down a canon. If the whole 
of such stream is allowed to pass over a wheel with its nat- 
ural flow, some power is generated; but if we, by a high 
dam, impound such stream and keep back its flow until we 
have a head of two or three hundred feet, we may then 
project a fraction of its flow against a turbine with an in- 
tensity hundreds of times as great, and limited only by 
the height of our impounding dam. Just so does the price of 
coal, or salt, or starch, or oil depend on repression and re- 
striction. The prices may be thus increased a hundredfold, 
and yet with even less reward to producers. 

Now natural opportunities, land and it-s elements and 
the forces contingent on it, are of varying degrees of rich- 
ness or capacity. 

Nature has not distributed the fertility of soil, the de- 
posits of mineral wealth, of streams and sea with unvarying 
sameness over all areas. These things range from small 
areas of almost perfect richness to wide areas of such pov- 
erty as to be not worth attention. Hence, to insure the ful- 
lest output, Society must obviously guarantee the fullest 
employment of the richer grades of resources, beginning at 
the richest and including all those of decreasing grades of 
richness, until her fullest needs are supplied. In other 
words, no one should be employed taking coal from mines 
where but ten tons were procured with a certain quantity of 
effort, while other fields of coal were idle where the same 
effort would produce a hundred tons, or even eleven tons. 
No one should be compelled to transport stuff by wagon 
at hundreds of times the effort with which it could be moved 
by railroad. Society should guarantee the full working of 



122 RIGHT AND RICHES 

the richer resources, and by the most effective means. To 
this end she should assert her rightful ownership of all such 
richer resources, and give everyone access to them on equal 
terms, so that they may enjoy their natural function of cre- 
ation. Millions of tons of fruit should not be allowed to rot 
in orchards because freight rates are exorbitant. Conces- 
sion now dominates nearly all resources, however poor or 
rich. 

The revenues of concession are from two distinct fac- 
tors. The first is natural rent, or the natural value of the 
actual use which is made of the resources controlled. The 
second factor is that addition to natural prices which are 
levied upon consumers by means of monopoly, or the PRE- 
CTUSION OF USE— by holding rich resources idle in 
order to limit output, which may be termed PRECLUSION 
CHARGES. The Preclusion Charge is a direct loss to the 
consumer by increasing the cost, or reducing the quantity 
of his subsistence. It is an equal loss to the producer by 
the waste of that excess of labor required to produce from 
inferior opportunities. Or, stated in another form : 
Through Preclusion of opportunity, or holding of resources 
out of use, the producer's actual output is reduced in exact 
ratio with consumer's supply; or in inverse ratio to the ex- 
cess of cost to consumers above the Natural Price. 

If producers had full use of the richest opportunities, 
there would ensue such a plentiful product that the same 
total of rent now paid to Concession might be taken from 
such product, and yet, with only a fraction of present prices 
to consumer, leave producers a multiplied reward. Hence, 
we see that Concession robs Society of its rightful revenue 
— natural rent. It thwarts productive effort by holding im- 
mense resources idle and diminishing product, that it may 
thereby plunder consumers through increased prices of 
goods. 



THE DOMAIN OF USE 123 

Let us suppose an isolated community having 100,000 
acres of land ; ten persons own it, having 10,000 acres each. 
Instead of using as much as possible they agree together and 
use but a small part, and by precluding the use of the rest, 
charge a proportionately higher price for the output. Now 
is it not evident that the small production will yield as 
much to the owners of the land as though all were culti- 
vated? We see then that there is a revenue from preven- 
tion of use, which is often greater than that from use. Nor 
do we have to resort to some small island for example. In 
California, almost adjoining land which brings rental of 
$100 or more per acre per year, one estate owns thirty miles 
of Ocean front, and not far away is a beautiful island thirty 
miles long, owned jointly by two men, who make or allow 
but the slightest use of it. It is claimed that the cotton 
planter's union, by limiting the acreage, has greatly ad- 
vanced the price of their crop, and that they are now 
alarmed because Australia proposes to grow cotton, and are 
already trying to induce the Australians to join their union. 
The prices of iron, cement, lumber, in fact most commodi- 
ties, are many times what a full output would maintain. It 
is said that a reduction of half from usual agricultural 
crops more than doubles their price. 

It is plainly apparent that under a condition of society 
where none controlled any resources except such as he act- 
ually used, there would be due from those using the richest 
resources a premium to compensate the less fortunate ones 
who must produce from inferior supplies. This equaliza- 
tion could only be made in practice by each paying to So- 
ciety, the real primary owner of all resources, a premium 
commensurate with such richness, which would be natural 
rent. 

The use-preference or natural rent of one parcel of re- 
sources over another arises from different causes according 
to its class. The essentials or resources of production from 



124 RIGHT AND RICHES 

which accessage is collected may be divided into the fol- 
lowing classes : 

First, the SURFACE of the land or soil. 

Second, its CONTENTS, mineral deposits, etc. 

Third, ACCESS to market, means of transportation, 
communication, etc. 

The surface of land, other things being equal, decreases 
in value in ratio to its distance from some social center. 
Social centers may be centers of population, of exchange, of 
residence, education, or centers of other attractive force. 
The preference in contents of land depends on their ease of 
availableness. Their value decreases, other things being 
equal, in ratio to the amount of labor required to procure 
and adapt them to use. It is manifest that only the most 
limited areas of land can be at the centers. The Contents 
of land, mineral deposits, forests, clays, coal, etc., while 
plenty in the aggregate, are found on more or less small 
areas. Some room is required for operations in working 
them; so under even ideal conditions, it is only possible for 
but few to use the very best. One hill may contain, as at 
Carara, enough marble for a hundred generations. Iron 
mines, limestone ledges, coal measures, are almost inex- 
haustible, yet beyond the reach of all but the few. The 
rapidity of decrease in availableness of supply frorn first 
to last choice, varies with different products. Fire clay is 
limited in extent, while building brick clay is general. 
Limestone covers wide areas in much the same degree of 
convenience to be quarried. There may be but one spring 
of a certain mineral water, while water of general utility is 
widespread in its supply. 

The control of the means of ''Access" to market is per- 
haps of equal value v/ith the "Contents" or ''Deposits" of 
materials. How large a portion of the contents of land is 
of no value, because those who dominate Access to market 
through ownership of railroads, banks, terminals, etc., and 



THE DOMAIN OF USE 125 

through ''Combinations in Restraint of Trade," preclude it 
from any outlet. 

Let us classify the resources of a certain community into 
ten grades; let us suppose that it contains 100 units of la- 
bor, each unit we will represent by L. The product of 1 
unit of labor in the 1st grade will be wealth to the amount 
of 1,000 units, or 1,000 W; in the second grade, 500 W; in 
the fourth grade, 250 W ; in the fifth grade, 200 W, and so 
on. Hence, on account of preclusion there is only 1 L or 
1 per cent, of the labor of the community employed in the 
1st grade, 2 per cent, in the 2nd, and so on, according to 



the following 


table : 






Grade of 


Efficiency 


Units 




Resources 


of Labor 


Employed 


Output 


1 


1000 


1 


1000 


3 


500 


2 


1000 


3 


333 


3 


1000 


4 


250 


4 


1000 


5 


200 


10 


2000 


6 


166 


10 


1660 


7 


142 


10 ■ 


1400 


8 


125 


10 


1250 


9 


110 


10 


1100 


10 


100 


40 


4000 



15410 

This table shows that although twice the number be 
employed in the 2nd grade, 4 times in the fourth and ten 
times in the 10th, the output is no more. 

Again, supposing that the capacity or extent of the 
first grade would give room for the employment of 50 units, 
or 50% of the labor, and the second grade the other 50%. 
See what a great increase of output is possible; for the 
first grade would yield to 50 units of labor 50,000 units of 
wealth, and the second grade 25,000 units of wealth, or a 
total of 75,000 units, or almost five times the present output 
with the same expenditure of labor. Therefore, we see 
the margin of preclusion is at 100, although there are 
abundant resources, for several times the present output, 



126 RIGHT AND RICHES 

having a productiveness sufficient to give labor an efficiency 
of 1,000, or ten times its present productiveness. Hence, 
in such a community, concession by precluding use would 
be causing the product to cost ten times the labor, or would 
be reducing producers' share to less than one-tenth their 
natural reward and increasing the cost to consumers, to 
ten times its natural price. 

Now of course this is only a hypothetical community, 
but let us compare it with our own community. Compare 
the efficiency of a railroad train carrying 40 cars of 40 
tons, or 1,600 tons, each, 15 miles an hour, and a common 
wagon carrying one ton three miles per hour. You see we 
have an efficiency of 8,000 to 1. But the railroad train will 
take, perhaps, in its crew, care-takers and track repairers, 
say, 40 men to the train, though I think this could be great- 
ly reduced if roads were double tracked and worked to their 
fullest capacity. But even at 40 men we have an efficiency 
per man of 200 to 1, yet we see rates so high that a common 
wagon can compete successfully in some cases with the 
railroad. 

It is said by eminent scientists that the gas from a 
bushel of coal has a much greater heat efficiency than the 
coal itself as commonly used, and that the by-products will 
more than pay for the work of gas-making. Yet see the 
labor that is wasted in handling and in using coal, and the 
enormous destruction by smoke, causing in some cities an 
excess of deterioration of several per cent, on all structures, 
furnishings and fabrics, or a sum many times what the total 
cost of gas fuel would be. Why not convert all coal into 
gas or electricity right at the mines? Millions of acres of 
the best land is idle while land with not 5% of its efficiency 
for growing crops is used. Of the better grades of land a 
large share can be but partially used by tenants-at-will. It 
is used but for annual crops, while it might produce ten 
times the value in fruit. Such tenants cannot give it the 



THE DOMAIN OF USE 127 

drainage or fertilizing which would multiply its output. 
How many of the best lots in cities are cumbered with 
shacks ! 

There can be no doubt that under a wisely regulated 
production, with the full use of native resources and the 
increased use of improved methods, which would then be 
available, the output of industry would be more than ten 
times what it is now. 




CHAPTER IV. 

Thij Consume:r's Rights. 

HAT are the consumer's rights in the output of 
wealth from the abundant resources God has 
provided for him? 

What is his loss to Concession? 

The degree in which Concession deprives the consumer 
is reflected in the general standard of living among the 
masses. In one community meat is eaten by all, and at 
every meal, while the masses in another may seldom be able 
to taste it. The standard of living in one community may 
embrace pianos, theaters, art, periodical literature, the daily 
paper, education of children, carpets, horses, etc. ; in an- 
other the most meagre necessities, due to the exactions of 
those who dominate the resources of production. 

In considering this question we must entirely eliminate 
the money price as a measure of cost, and confine our es- 
timate to the time cost, hours-per-day-cost, in individual 
effort. It is indifferent how many dollars each has, but 
how high a standard of living. Whatever curtails produc- 
tion increases the cost of living. 

If birds or insects ravage crops, the planter is not the 
only, nor perhaps the greatest sufferer. How much more 
then is the consumer's concern when wanton idle humanity 
represses output; for the loss then is not alone what output 
is curtailed, for the human parasites use the spoil gained 
by its restriction to purchase goods for destructive waste. 

Trust prices of shoes, flour, meat, fuel, all the require- 
ments of life, are too well known*to need much comment. 
The people of the Great West are acquainted with the effect 
of railroad rates on what they use; yet there seems to be a 

128 



THE CONSUMER'S RIGHTS 129 

widespread blindness to the effects of a tariff tax on im- 
ports. But in the ratio in which domestic commerce ex- 
ceeds foreign, a ratio of several hundred to one, so the im- 
portance of the tariffs of concession exceed those of custom- 
house dues ; especially in our own land where we have near- 
ly fifty great commonwealths trading freely together. Ex- 
press, telegraph, telephone, and railroad charges, and most 
of all land rents, affect us as consumers. 

Nevertheless the evils of the infamous tariff tax to both 
producer and consumer can hardly be overestimated. What- 
ever the method by which one individual or nation seeks to 
profit by another's loss is always unnatural, wicked, and in 
the long run results in loss to such nation or individual. 

For hundreds of years the Moor pirates had levied trib- 
ute from the commerce of all nations. Their ancient head- 
quarters were at Tarifa, hence the word ''tariff." The 
American spirit of freedom rebelled and the cry was raised 
"Millions for defense, but not a penny for tribute," and 
these bands of pirate tariff-takers were driven from the seas. 
And as this spirit of freedom becomes more enlightened, as 
the masses come to have enough fraternal love and un- 
selfishness to stand together and support a defense, we shall 
see concession's piratical tribute resisted. 

But the tariff issue as defined by the two dominant par- 
ties is devoid of principles. One party wants a tariff 
avowedly for protection, the other wants a tariff, of the 
same rate as far as we may judge by their declarations, 
but for goodness sake, not for protection! For revenue 
only! 

Nothing could be a more palpable absurdity., 

I knew a schoolboy who was caught stealing quite a 
quantity of tobacco from a schoolmate, and when the 
teacher was surprised to think he wished to chew it, he pro- 
tested with righteous indignation that he did not chew. He 
was going to put it in his clothes to keep the moths away, 



130 RIGHT AND RICHES 

and seemed to be totally oblivious to the crime of taking it. 
What possible difference can it make to the victims of the 
tariff whether the enactors of the law have the one or the 
other of two abstract motives? 

Those who pay customs dues, either do owe the gov- 
ernment or they do not. If they do they should pay ; if they 
do not, then to make them pay one cent is a crime. And 
who pays but the consumer? For it is ever added to the 
price of goods. 

Yet a tariff injures producers in like degree by narrow- 
ing their field of opportunity. 

But we in America have been especially blessed in that, 
while concession has continued to increase its levy on pro- 
duction, the wide domain, whose margin appears to be al- 
most reached, afforded a constant extension of opportun- 
ity, which, coupled with our marvelous inventive genius, 
has steadily multiplied output. Hence, while the standard 
of life among us is dreadfully repressed, while the results 
of poverty oji the millions among us is pitiable, yet this 
widening of fields and improvement of process has given 
to at least a numerous minority of our citizens a standard 
of life beyond the dreams of older countries. For notwith- 
standing the outcry among us against trusts and predatory 
wealth, the extent of Preclusion in America is but a frac- 
tion of what it is in older countries ; it simply takes a more 
noticeable form. 

This is why immigration sets so strongly our way. This 
is why our standard of wages is higher. But these new 
lands in America are all but exhausted. What will continue 
this prosperity? Education! Civilization! Brotherly 
love! Christianity! We have developed a citizenship that 
will not be again enslaved by the hereditary class. The 
leaven of Christianity is working. Benevolence is increas- 
ing. Love in the family is more general. The air is full 
of reform. The Americans of to-day, crowded to the limits 



THE CONSUMER'S RIGHTS 131 

of new land, are getting ready to stand together for their 
rights. The next few years will see a reform of tax and 
title laws; a resistance of high rents. Sir Thomas Lipton 
says such abundant production as we are having in Ameri- 
ca was probably never dreamed of before in any country. 
Yet discontent is now almost as great among the masses 
at the inequality of its diffusion as in the hardest times. 

There is a correlation between inventive genius and this 
wider field of opportunity which our wide domain has af- 
forded. Given a large native supply to draw upon, the 
producer bends his energies to develop the resource with 
mind as well as muscle. Steam, electricity, compressed air, 
steel, cement, all the elements of science and invention are 
called into use. But when the real producer (for we must 
eschew the sophistry which includes all profit-takers as pro- 
ducers, all stock jobbers, land speculators and franchise 
grabbers) when the real producer is only a beast of burden, 
having no interest in his task, with the beneficiary of his 
toil a distant hereditary parasite on industry; whence can 
come application of progressive means ? 

But the fruit of every scientific process is to-day largely 
taken by Concession. Greed is now less dense, less person- 
al, but more highly organized. Does a gas company offer 
a larger percentage of interest to seekers of investment be- 
cause its by-products increase from year to year? No, it 
issues more stock. Does it sell gas cheaper? Very seldom. 
Do inventions and discoveries in general tend to raise the 
rate of wages? Not directly. The extent to which the 
fruits of progress and larger output are taken by conces- 
sion-holders must be studied and apprehended by the people 
before relief can com.e. If the investment of a certain sum 
in a given line of industry return profits above a regular 
interest rate, what is the result? Capital will, if permitted, 
flow into such industry rapidly until the normal rate is 
reached. But if the owners of the industry have a control 



132 RIGHT AND RICHES 

of resources by which competition can be avoided, then 
their concern automatically assumes a vested value, and 
the stock sold to the public by them represents this infla- 
tion rather than increase of real capital and productive- 
ness. Access to resource and market assumes a value equal 
to the difference between the actual sum invested and the 
amount on which income will now pay normal rates. 

It is common for the stocks and bonds of such concerns 
to be increased by the issue of what is confusingly termed 
''watered stock," until they reach an amount of which the 
ordinary rates of 5 to 7% will be paid. The expression 
''watered stock" conveys the thought of dilution, as a dis- 
honest person might put water into syrup. The addition to 
securities, such as here indicated, represents the growth of 
concession's value, which is the most permanent form of 
value and the most likely to pay dividends. This growth of 
concession value proceeds both from increased patronage 
and higher tariffs as well as from lower production cost. 
Though such a concern borrow capital, it will pay only mar- 
ket rates. Accumulators of capital are still restricted to 
market interest rates when they wish to invest. 

President Roosevelt's recent message has inadvertently 
raised the discussion of a most important question. Is the 
State under any obligation to recognize the sacredness of 
property based on this inflation? Must rates for public 
service be based on the topmost price to which stock-jobbers 
can boost prices by fictitious sales and misrepresentation? 
Must we pay $1.00 for gas because gas stock sells on the 
basis of $10,000,000 valuation for a plant that could be 
duplicated for $1,000,000 simply because the gas company 
boosts it by boasting an exclusive and perpetual franchise? 
Or has the city the right to build a new plant for $1,000,- 
000 and furnish gas on that basis of cost? 

The law of value of groups applies with special force to 
concessions. An increase of the price of commodities with 



THE CONSUMER'S RIGHTS 133 

free competition, at once tends to increase the output and 
so restore former prices. Not so with concession property. 
There remains but the one gas company, one telephone or 
telegraph monopoly. Every new schoolhouse, every new 
invention, everything that makes for peace, and larger use 
of wealth, also raises rent. Every piano factory, every 
automobile factory, every trolley line, every new magazine, 
every new bridge, every paved road, every ship canal, tends 
to raise rent. All these things increase the power to patron- 
ize concession, and no increase in quantities of opportunities 
can take place. The desire for land is universal and its 
purchase is only limited by the wealth with which to buy. 

Do you know, Mr. Consumer, that you pay the dividends 
on the forty to eighty per cent, of the stock of corporations 
which represent franchises or land title, controlling natural 
resources ? 

How much do we pay for oil, coal, lumber, all the com- 
mon essentials of subsistence, in excess of their productive 
cost ? 

What percentage of your annual income do you pay 
as the arbitrary addition to the price of your fuel in the 
past few years ? Has the Reward of Production increased ? 
No. Whatever addition has been made to wages paid to 
miners has been more than offset by increased output with 
improved methods and machinery. Do you know how 
much the freight rate on coal has been advanced in the 
face of a reduction of fully half in cost of carrying it ? Who 
gets it? Why has lime, cement, sand, lumber, everything 
for the building of a house advanced ? The answer is, the 
raw materials have been cornered, the freight rates raised, 
the rent of the manufacturing site, and merchant's shop, 
doubled or quadrupled. 

Do you notice that the output in many of the larger 
lines has been increased per worker in the past few years 
from two to ten fold, while the price you are paying has 



134 RIGHT AND RICHES 

been increased? The cost of producing copper was so 
much reduced by improved process that the deposits worth 
working were multiplied. Did the price come down in pro- 
portion? No, the trust stored the output and held it up. 
When the trust got shaky the price fell ; but with its reor- 
ganization the price will be restored. 

Did you ever see a modern sawmill almost automatical- 
ly snatch the logs from the water and turn them into lum- 
ber, a hundred times as much in a day with the same crew 
as when lumber was a third its present price? Who gets 
the profit? The owner of the forest and the carrier. Lum- 
ber was delivered to the building a few years ago for little 
more than present stumpage in Oregon. 

We should enjoy a multiplied supply of commodities 
out of the multiplied output. It is our right to demand it. 
At the same time that we as individuals are engaged with 
the problem of increased prices, our cities are struggling 
with treasury deficits where they have recently given away 
franchises worth tens of millions. 

Even moral reforms increase this arbitrary Concession 
value. Governor Folk in speaking of the great benefits of 
closing the race track gambling and the Sunday closing of 
saloons, says : 

"The result of two and a half years of strict enforce- 
ment of the laws in Missouri has been remarkable. In St. 
Louis there is more building to-day than in twenty years. 
In Kansas City real estate has risen in value more in the 
last two years than in ten years before, and St. Joseph is 
rapidly forging to the front." 

We hear much, especially in campaign times, of the 
importance of "the farmer" in the commerce of the land. 
Now who is this very important "farmer"- for whom high- 
priced wheat is desired? He is no other than the owner of 
the farm land. High-priced wheat means high rent, not 
higher wages on the farm. What class kept a protective 



THE CONSUMER'S RIGHTS 135 

tariff in England on breadstuff until the Cobden Club agi- 
tation? Who keeps it on to-day in Germany but the land 
owners? The farm laborer is exactly equal to other labor- 
ers in what he does for society. He does no more than the 
factory worker, and deserves no more consideration from 
the legislator, nor does he get it. The land owner is the fel- 
low who makes the noise. His representative says, ''We 
feed you all. No business can exist without the farmer. 
Agriculture is the basis of all commerce, etc." Nonsense ! 
We do not any more depend upon those who till the soil 
than other workers. The owner of the land is only an ex- 
hausting parasite. But we do depend on the soil. The 
owning of the land by the so-called "farmers" is of no bene- 
fit to society, but the land is vital. It is not good for so- 
ciety for land to be high priced and rents high. Yet high 
rent and high land result from large output of wealth. 

There is a moral in this for those whose resources are 
in land or other form of concession. They should see the 
importance of all progressive and moral reform to the value 
of their property. Good streets, good roads, good schools, 
civic improvement in general, should be worked for and 
encouraged by them from purely selfish interest, if for no 
other reason. It is to the credit of that bright body of men 
in the real estate business, that they are usually found work- 
ing energetically for every progressive measure, though 
few of them seem to realize the evil effects of high land 
values and high rents. 

What excuse is there to-day for anyone in this land to 
lack food, with such abundant crops and such magic me- 
chanical means of moving them; or shoes when machines 
grind them out by the million; or homes when there are 
such effective and bountiful means of building. Why 
should babies and children whose weazen faces show lack 
of nourishment, be so commion on street cars and in the 
populous quarters of all our cities? Why should human 



136 RIGHT AND RICHES 

beings in America exist in dark, dirty cellars, above or be- 
low ground? Why should multitudes of rural children be 
almost as bereft of the knowledge of real life and comfort as 
the beasts of the field? Why? It is not alone because a 
large share of output is arbitrarily taken by those who do 
nothing to promote it; but that output is dwarfed by the 
preclusion of resources to use, by their being held idle to 
maintain excessive prices. 

Let us legally open to production the Domain of Oppor- 
tunity of Highest Efficiency, by collectively asserting our 
Right of Eminent Domain, and thereby establishing sup- 
plies at Natural Prices ; by building public roads, public 
railroads, public canals and cement mills, by establishing 
public forests and lumbering plants, public water power and 
electric plants, public coal mines, oil wells, refineries and 
steamship lines. Also let us tax opportunities held idle the 
same as like opportunities at work. Thus let us open wide 
the gates of opportunity. Then there will be no^ lack to 
society's supply, for the impulse to produce even in this 
"world of greed" is stronger than that of pay. 

Millions are constantly clamoring for the chance to pur- 
sue some art. A fev/ have transcendental notions of their 
sphere, but the majority are abundantly practical in their 
choice of a calling. 

Thus let us not only restore to rightful owners that ma- 
jority of output now taken by drones, but let us enable an 
output five to ten times that of the present. Let us claim 
the prodigious fruits of invention and intelligence, of prog- 
ress, civilization, Christianity, as the rightful estate of all, 
and no longer be satisfied with the crumbs and scraps doled 
out to us by a privileged class. 




CHAPTER V. 

The^ Producer's Rights. 

HAT are Natural Wages and Interest? As we 
have before stated, workers are naturally im- 
pelled to produce, not by the pay which is pre- 
viously stipulated, either by an employer or what 
is expected to be procured from sale of output, but by the 
innate joy of producing. How, then, can there be Natural 
Wages even as an ideal ? Very consistently, for just recom- 
pense seldom comes as a stipulated, but as a natural return for 
right action. A good temperance man does not refrain from 
drink through fear of tremens or bankruptcy, yet he gets the 
just reward of being temperate. One who is honest simply 
because he thinks it pays, is not safe to trust ; yet there can be 
no doubt that one who is naturally honest from pure love 
of honesty and from love of right, should be rewarded — is 
rewarded. So while pay is not a noble motive for labor, 
recompense is a noble impulse in its beneficiary. And while 
greed does not and cannot promote industry, personal im- 
pulse and initiative can and does. 

If communal production and common use may be con- 
ceived of as a possible ultimate ideal, which we need not 
here decide, at any rate it may only be reached by gradually 
working up to it. It seems far more practical to undertake 
some degree of common production and use; that is, the 
public ownership and operation of some utilities, and mean- 
time to adopt an ideal reward for individual effort. Any- 
how, we shall need to hire workers under public ownership. 
Tet us then seek to find what such just recompense is. 

We have seen that the present meagre reward is deter- 
mined solely by the demand for accustomed subsistence, and 

137 



138 RIGHT AND RICHES 

that the so-called ''Margin of Rent" is only a fiction. But 
when we apprehend the "Eminent Domain of Efficiency" 
we find that its margin is the Margin o^ Natural, RitNTS, 
and that this margin also defines the measure of Natural 
Reward — Natural Wages and Interest — on the one hand, 
and Natural Public Revenue on the other. 

Concession now includes in her domain all resources and 
opportunities, not alone that which will pay to operate 
whether now being used or now idle, but all that might in 
future pay. This is why there is no definite margin to Con- 
cession's rent. But the Domain of Use, as it includes no idle 
resources, is not nearly so extensive. Everyone could find 
all the room that he needed for employment on but a frac- 
tion of the field of resources now dominated by concession, 
were all to work on the richest and best. 

Suppose resources, soil, clay, stone, mineral deposits, 
means of communication, etc., were graded from the most 
perfect, which might be said to have a productive capacity 
of 100,000 down to that with a productive capacity of 1,000, 
100, 1. Now, with all resources so graded, let us suppose 
there would be no need to operate any with a productive 
capacity poorer than 1,000. 

Grade 1,000 would then be the "Margin of Natural 
Rent." Society might then leave all resources poorer than 
1,000 open to private use and exploitation. The whole out- 
put of such "open" resources would then be the minimum 
Natural Reward of Production. 

But you say this is all too theoretical. It would be im- 
possible to so grade all resources. Manifestly it would be 
impossible to survey every acre of land and tag it with its 
grade. But a very simple rule will make it automatically 
grade itself. Society has but to insist that no resource shall 
be held idle; that anyone wishing to produce may take pos- 
session of any idle resource which is worth working — that is, 
that use may have Eminent Domain. By this very simple 



THE PRODUCER'S RIGHTS 139 

rule the resources rich enough, to be worked would be auto- 
matically determined and put to work. Thus a sufficient 
volume of the best would be selected and would belong to 
Society. Whatever would be outside the scope of this 
Domain would remain open to the pleasure of private ex- 
ploitation, and its product would be its reward. 

Society should assert her estate in such Eminent Domain 
of Resources by some reasonable means which we will here- 
after consider, and then all access charges would belong to 
society as a natural source of taxes. Society should, how- 
ever, operate under her own corporate control and manage- 
ment, many of the enterprises of production and service. In 
fact a large share should be so operated; a share increasing 
with the progress of civilization or brotherhood, but to do so, 
Society must employ individual workers and perhaps borrow 
capital. 

What recompense should she give such employes, and 
capital furnishers? 

How much should mail carriers, operators of municipal 
light, heat or power plants, receive? 

How much should mayors, governors, councilmen, legis- 
lators, congressmen, receive as a recompense for their serv- 
ices? 

Why, Natural Wages, of course. 

Why should the public, any more than a private corpora- 
tion, take service without recompense? 

What interest should Nation, State or City pay? 

Just such an amount as people would be willing to save 
for — Natural Interest. 

With opportunity for all to produce and acquire wealth 
all would have incomes; each would have his own ideas of 
the price of abstention. Such price as would procure the 
saving of the requisite fund of capital would be Natural In- 
terest. If a certain rate did not procure the desired fund, 



140 RIGHT AND RICHES 

more should be paid. The abohtion of Preclusion will es- 
tablish Natural Interest for the use of capital is now re- 
stricted by the concessionizing of resources, by compelling 
capital to accept a share in common with fictitious and arbi- 
trary property in lands and franchises, represented by multi- 
plied stock and bond issues, calling for rents and dividends. 

But with the wide field of free opportunity outside the 
Domain of Greatest Use; or within such domain after pay- 
ing Natural Rent, Capital could always make a liberal rate 
of interest. For under such conditions there would be such 
unhampered opportunity for the use of capital and such 
abundant increase from such use that savers would not be 
compelled to stint and starve in order to accumulate. 

Nothing is more absurd than to dogmatically say that in- 
terest should not be more than 2 or 3 per cent. All have a 
free opportunity to save, to some extent at least, but all have 
not a free opportunity to use capital. No class has any 
monopoly of saving; hence, interest should be left to agree- 
ment to supply and demand. This does not deny the wis- 
dom of reasonable usury laws to protect the helpless. 

We establish Natural Wages and Interest when we pre- 
vent rich resources from being held idle, for we then open 
up to all the opportunity to produce. 

But the question arises : How may we determine what 
is a just rate of wages by this natural standard until this 
Domain of Opportunity shall have been established ? 

Manifestly, we may not define it in dollars and cents. 

But by taking the Domain of Use as a working theory — 
even as we use the "atomic theory of matter" and the 
''etheric theory" of light as a working basis in physical 
science, and the perfect man in God's image as revealed in 
scripture, as our model and basis of Christian science — we 
may then begin to form true and definite conceptions. If we 
conclude that production might by the most efficient use of 
opportunities be multiplied by ten, then to be conservative 



THE PRODUCER'S RIGHTS 141 

we may at least assume that wages ought to be at least five 
times their present rate, and consumers' cost one-fifth what 
it now is. 

If the present wage among us is an average of $1.50 for 
ten hours, we may Ihen safely assume $5.00 for six hours 
to be no more than a fair wage. And when we compute the 
marvelous productive increase offered by improved pro- 
cesses applied in recent years, the correctness of such esti- 
mates of a minimum wage is incontrovertible. 

However, all reforms are best brought about gradually. 
This ideal of Eminent Domain must be established by taking 
a little here and a little there; by extending the scope of pub- 
lic undertakings ; by fixing lower and lower rates for public 
utilities privately owned; by establishing collective competi- 
tion here and there; by breaking up the largest estates; by 
reserving and recovering certain useful, natural deposits; 
by extending the scope of free public service and enjoy- 
ments, such as playgrounds, baths, highways, etc.; by ex- 
tending the power to condemn property, now enjoyed only 
by railroads and a few other such corporations, to more and 
more lines — to factories, private schools, merchants and 
farmers. This gradual widening of the productive field will 
tend to automatically raise the wage rate gradually towards 
the Natural Rate. 

As has been pointed out, the opening up of new and free 
fields has heretofore been of untold value to American work- 
men. But this free field for the settler and prospector is 
visibly narrowing. We are rapidly becoming a congested 
community. Not that our natural resources are not ample 
for many scores of times our present population, but that 
the hand of greed grasps them and demands a constantly in- 
creasing toll. Some measure of reform is being attempted 
in the matter of withholding title to public coal lands. Re- 
form of mining claim laws is greatly needed. We may con- 
cede a very large reward to the prospector who discovers a 



142 RIGHT AND RICHES 

new camp, but what is the sense in allowing those who hear 
first of its discovery to rush in and stake free claims ? 

PropriETorism and Labor Unions. 

We have recently seen the evolution of an alternative 
among us which gives great force to the demands of labor. 
This is the labor union, imported from Britain. 

In much "poetical" economic writing, labor is supposed 
to employ capital and "land" in production. Such it may do 
at the most primitive or initial step, but m civilization little 
production occurs where the laborer is also proprietor. 

Where so remote that land is valueless, the planter works 
and gets the crop. But as soon as civilization approaches 
he gets title to the land, and shares its crop whether he work 
or not. Capital as seldom dictates the terms of production. 
How few industries are not established on some vested in- 
terest? In actual practice the great industries to-day are 
controlled by "proprietorism." Manufacturers have learned 
this much of economics. They now strive to control their 
raw^ material, and as much as possible the means of handling 
it. 

Proprietors assume the sole right to dictate terms to 
both producer and consumer. The "Boss of Production" 
pays labor as low wages as it may be secured for, and sells 
the output as high as possible. 

Where does he get this right? 

When street railways are consolidated, and the in- 
creased income is stocked for millions, are wages raised? 

When tariffs are raised to protect special interests, do 
they raise wages as their profits advance? 

It is not a popular doctrine that the share allotted by 
competition as wages is not increased by prosperity — by 
largely increased output — but the facts support it. 

If a new process of making starch gives double the out- 
put with the same labor and cost of equipment, either one of 



THE PRODUCER'S RIGHTS 143 

two things will occur — starch will be cheapened in propor- 
tion and the consumer get the benefit, or on the other hand, 
the starch-makers combining the skill, etc., will merge and 
issue double the stock, or the land where the starch-giving 
plants are grown will bring more rent; usually the latter. 
Workmen in starch works, or those who grow starch- 
yielding plants, would receive no more on account of the in- 
creased output, but as consumers they would benefit if the 
price were lowered. What a terrible appreciation of land 
has resulted from prosperity in the last three years ! Ad- 
vances from 25 to 500 per cent, in farm lands, and equally 
as much in city lots ; will agricultural labor easily get much 
advance when crops must pay on such valuations? With 
constant advances of rent, will factory workers and mer- 
chants gain much from big output and sales ? 

"Proprietorism" is commonly called ''Capitalism," but 
this is a misleading term. Society and Labor have no quar- 
rel with Capital. The Proprietor is an intermediary be- 
tween the worker and owner of capital on the one hand, 
and Concession on the other. Sometimes he owns some 
real capital; sometimes he does productive work; some- 
times he owns concessions, but usually he is the agent of 
both Capital and Concession, and generally is oblivious of 
any distinction between capital and concession. Proprietor- 
ism is not a new institution. Abraham and Lot divided the 
plain between them. Their ignorant herdmen were then 
ready to fight for their masters, but unconscious of their own 
rights, as some "hirelings" are to-day. 

The rapid increase of mechanical and engineering skill 
in recent years, by their increased pov/er of output, has mul- 
tiplied the importance of control of deposits of native re- 
sources. Real producers — workers — who control their sup- 
plies, are rapidly becoming a thing of the past. Proprietor- 
ism has taken the field. Without some means of enforcing 



144 RIGHT AND RICHES 

their demands, laborers and capital savers would be en- 
slaved. 

However great the loss to himself and to society, the 
capitalist can refuse to save, to renew capital, can consume 
the old if the rate is too low, but laborers cannot indefinite- 
ly cease working. Left to individual freedom of contract, 
they will be enslaved. The labor union is a necessity to pre- 
vent this enslavement of the laborer; for the acquisitiveness 
of the individual laborer, as manifested in his capacity to 
look out for his own interests in the matter of wages, tends 
to decrease in inverse ratio to his productive efficiency. 

Left to the false protection of individual selfishness, his 
case is hopeless. The laborer can never be liberated by his 
own avarice, but only by its very opposite, benevolence, 
brotherly love. He must be saved by obedience to the com- 
mand, "Let every one consider not his own but his brother's 
good." 

The measure in which Labor Unions represent this true 
unity of man will also be the measure of their benefits to 
workers. This conception does not imply the laborer's 
hatred of his employer, but united resistance to wrong sys- 
tems. 

"To the capitalist corporation the wage contract is simply 
a question of so many dollars to be paid," writes Sidney Webb 
in the International Monthly. "To the workmen it is a matter 
of placing, for 10 to 12 hours out of every 24, his whole life at 
the disposal of his hirer. What hours he shall work, when and 
where he shall get his food, the sanitary conditions of his em- 
ployment, the safety of the machinery, the temperature and 
atmosphere to which he is subjected, the fatigue or strains that 
he endures, the risks of disease or accident that he incurs, all 
these are involved in the workmen's contract, and not in his 
employer's. These are matters of as vital importance to the 
wage earner as are his wages. Yet about these matters he can- 
not, in practice, bargain at all. Imagine a weaver, before ac- 
cepting employment in a Massachusetts cotton mill, examining 
the proportion of steam in the atmosphere of the shed, testing 
the strength of the shuttle guards, and criticising the sound- 



THE PRODUCER'S RIGHTS 145 

ness of the shafting belts. A Pittsburg mechanic prying into 
the security of the hoists and cranes or the safety of the lathes 
and steam hammers, among which he must move: a work girl 
in a Chicago sweatshop computing the cubic space which will 
be her share of the workroom, discussing the ventilators, 
warmth and lighting of the place in which she will spend nearly 
all her working life, or examining disapprovingly the sanitary 
accommodation provided: think of the man who wants a job 
in a New Jersey white lead works testing the poisonous influ- 
ence of the particular process employed, and reckoning in 
terms of dollars and cents the exact degree of injury to his 
health which he is consenting to undergo. On all these mat- 
ters, at any rate, v\^e must at once give up the notion of free- 
dom of contract. In the absence of any restraint of law, the 
conditions of sanitation, decency and security from accident in 
the various enterprises of the United States Steel Corporation, 
or the Standard Oil Company, the Western Union Telegraph 
Company, or the Pennsylvania Railroad, are absolutely at the 
mercy of the rulers of these great undertakings. They decide 
these questions of life for the millions of workmen whom they 
employ — and thus, to this extent, for the American Nation — as 
arbitrarily (and it is to be hoped as humanely) as they do for 
their horses." 

"In the general course of human nature," remarked the 
shrewd founders of the American Constitution, "power over a 
man's subsistence amounts to a power over his will." 

Fai^se: Notions o^ Capital. 

It is a great fiction that rich Proprietors bring the cap- 
ital to a community. They, of course, do to some extent, 
but not in the degree popularly estimated. There is but an 
infinitesimal part of Output applied as "Capital" in the or- 
dinary acceptance of the term. Of course, the whole output 
may be termed capital, or stock, during a more or less brief 
period of its developrhent, but even so, almost the total value 
of such stock consists of tribute for concession. A crop of 
corn growing is capital, but its cost is largely rent until it 
is almost ready for use. A house in course of construction 
is capital, but the workmen may wait until it is completed 
for their pay. 



146 RIGHT AND RICHES 

In a city of 100,000 people the annual production of 
wealth may be $1,000 each, or $100,000,000. An influx of 
foreign capital of $10,000,000 in a year in that city would 
be thought remarkable. An application of one-tenth of the 
production, or $10,000,000 per annum for any number of 
years, would be beyond precedent. So it is easy to see that 
if capital and labor were free to use the resources of nature, 
and supply the needs of society, no borrowing need ever be 
done by one community from another. Mechanics of small 
wages who buy lots on easy terms get good homes in a few 
months without paying other interest than on the cost of 
the lot. A $100,000,000 street railway is perhaps $85,000,- 
000 franchise. Even the fifteen million real capital was not 
an initial investment of more than perhaps a few hundred 
thousand, which was supplemented perhaps by part of the 
fares taken in. There is no lack of capital, but lack of op- 
portunity to use it. If capital got all natural interest instead 
of concession getting most of the natural increase, no lack 
of capital would ever be felt. 

As prosperity increases, the "capital stock" of industrial 
corporations is doubled, trebled, quadrupled to be sold to 
the masses for their savings. Does this mean more real de- 
votion of capital to industry? No, but that those who own 
the franchises, lands, or other monopoly power, of such in- 
dustry, are trading its increase of value for this stock, and 
then unloading this stock onto the public. Hence conces- 
sion, by this means absorbs the wealth people are ready to 
devote to productive capital, and squanders it in "riotous 
living." 

An example of productive power when the industrial 
Proprietor controls his material, is exhibited by a great steel 
company. This organization has secured unlimited supplies 
of ore, fuel, and transportation facilities. They are even 
now arranging to avoid the expenses incident to city activi- 
ties — high rents, etc. — by building a plant on cheap rural 



THE PRODUCER'S RIGHTS 147 

land. No wonder its output staggers comprehension. No 
wonder if its profits are, as it is said, 75%. But the real 
producer, the puddler, the roller, the miner, the recent buyer 
of its securities, does not get this saving. They perhaps enjoy 
some increase^ but only a fraction of what goes to the pro- 
prietors. Yet there is much advantage to society, even that 
the proprietor of industry should dominate the resources of 
production, instead of capricious disinterested drones, for it 
is the proprietor's interest to turn out the largest possible 
output, and this at. least puts production on a surer footing. 
There is less danger of shutdowns. 

What if all natural resources were controlled, not by 
selfish industrial proprietors, but by government, with use 
guaranteed on equal terms to all who would produce? En- 
forced idleness would cease. Every industry would expand 
as has the steel industry. No one would need lack for any- 
thing. But the multiplied plenty that would result would 
not accrue to selfish corporate proprietors, to be expended 
in the vicious living that has disgraced Pittsburg, but would 
be divided betwen society and real producers — workers and 
savers. Workers would get the Natural Reward due them 
— such wages as were never before known. And Society, 
with the revenue derived from its natural income, would 
banish poverty, even from the widow and orphan, from the 
helpless invalid, and the mentally incompetent. 

Millions of acres now held idle would then be used. In- 
telligent cultivation would succeed the haphazard work of 
tenants at the caprice of selfish landlords. I do not believe 
there is a county in any State where there is not abundance 
of natural wealth either mineral or agricultural. It only 
lacks development. What are the most prohibitive bars to 
this development? Landowners and public carriers. We 
are told that only private enterprise develops industry. Do 
not the carrier systems favor the already developed industry ? 
The other monopoly interests do also. The tremendous 



148 RIGHT AND RICHES 

force of the banks and the daily press is on that side. This 
further concentrates population about these interests in the 
big cities. 

The complaint of merchants is common that "they are 
working for their landlord." Yet if they go where rent is 
low there is no business. This is not endorsing the pes- 
simistic complaint of those who believe the world is "going 
to the dogs." It is not; it is coming "from the dogs," for it 
ets better every day. Nor were opportunities ever so 



many. 



Motive: and Opportunity. 



Ours is not a creed of despair ; it holds out to the indi- 
vidual who has high aspirations the widest range of op- 
portunities. As the vessel with powerful motor can ride 
against adverse currents over the limitless ocean, so one 
who is impelled by the noble motive to be of service to man- 
kind, may ever find a field which greed, stupidity and fear 
are powerless to circumscribe. Never was there greater de- 
mand for the Roosevelt, Folk, or Hadley to lead in the fight 
on corruption than to-day; never was such demand for 
greater teachers, editors, preachers ; never was there such 
urgent call for legislators of broad knowledge of economics 
and statecraft ; never greater call for proficient chemist, en- 
gineer, or for the wise structural and civic master builder. 
This high and natural motive lifts one out of the mire of 
greed. Truly "the harvest is great, but the laborers are few." 
There is unprecedented call for men with right motives to 
work for human freedom. Tuskegee Institute is a grand 
monument to such endeavor. 

He who thinks only of the pay envelope has poor chance 
to succeed. The commission salesman who thinks little of 
his commission until he has earned it is much the most likely 
to make the sale. The merchant who tries most perfectly to 
serve his customers on fair margins of profit is surest to suc- 
ceed. In short, he who strives, no matter in what line of 



THE PRODUCER'S RIGHTS 149 

work he undertakes, to do it better than others, has ah'eady 
a broad field for his efforts. He must work persistently, 
hopefully, until such time ^s his merit is recognized, but his 
ultimate success is sure. 

The bane of the age is the "get something for nothing" 
class. The press gives much space to bonanza fortune 
strikes, and Young America becomes intoxicated with 
dreams of similar luck, and forgets the true and sure motive 
of business. 

Success or failure must obtain in one's thought before it 
can be manifested in tangible effects. 

It is the listless class with no aspiration or goal in life 
who demand our sympathy. This vast army of poor, help- 
less goalless humanity is the prey of the merciless system of 
greed. The way to pursue any course is to have a goal 
ahead. From this vast multitude, born amidst dismal sur- 
roundings, with a childhood spent without play and a youth 
without hope, it is as if by a miracle that one becomes pos- 
sessed of aspirations ; yet — 

In every face a lamp is framed 

Like searchlight to project its ray; 
By love alone is it inflamed, 

And 'lumes the heaven ascending way. 
Ah, you whose lamps have plentier flow 

Let brightest beams tired hearts inspire; 
Though eyes begrimed reflect faint glow, 

Love will relight the holy fire. 

Success is contagious. Those great leaders of accomp- 
lishment through noble efforts have an inspiring effect on 
humanity. 

"But when He saw the multitudes, He was moved with 
compassion on them, because they fainted and were scat- 
tered abroad as sheep having no shepherd * * * and 
He began to teach them many things." He was the guide, 
the way-shower. 



150 RIGHT AND RICHES 

Let us not alone break down the barriers that keep these 
milHons in the ''jungle," but let us through the embellish- 
ments and refinements of modern progress and Christianity, 
incite them to come out into the ranks of higher citizenship ; 
if need be, let us drive them out of both city slum and rural 
obscurity into the fraternal ranks of useful activity by re- 
placing such slum with Civic beauty and by banishing ob- 
scurity with means of intercourse and interest. Much prog- 
ress in this direction has been made, and is being made. 

"Think not that former days were better than these, for 
in so doing thou dost greatly err." 

But with the advance of science there should be much 
more rapid improvement of the condition of the masses. 
The burden of taxation should be taken from output and 
placed on concession. Tax the vacant lot as m.uch, or more, 
than the improved. Nor stop with this; allow the coal 
miner, the oil driller, the home builder, the agriculturist to 
condemn land or its deposits, just as a railroad company 
may do, taking full account of all real equities. 

A few acres of iron in one body was recently sold for 
150 million dollars. 

Why has our government given away this vast wealth? 

Principally because it has largely been appropriated by 
the owners before its v/orth was recognized by the public. 
Shrewd men have gone ahead of population and grabbed 
great tracts of land. Some of them are now being prose- 
cuted. Close corporations began to grab street railway fran- 
chises while electricity was little understood, and when it 
became recognized, continued to get them by bribery. 

The greatest obstacle in the way of reform is the ten- 
dency of people to defer to precedent. That is the fatal 
weakness of lawyers as legislators. They worship prece- 
dent as the Chinese worship their dead ancestors. The fol- 
lowing forceful presentation of this matter is from the St. 
Louis Censor: 



THE PRODUCER'S RIGHTS 151 

"Among other things that are being probed by an ever- 
increasing number of people, is the great and vital question as 
to whom this planet, called the earth, rightly and justly be- 
longs. It constitutes a question, that in my humble opinion will 
have to be answered in the next fifty years, and will assert 
itself with ever-growing insistence. 

"The statement is believable that ninety people out of a 
hundred, on first hearing the right of private ownership in land 
questioned, are mildly shocked, and look upon such a bold ques- 
tion as a dangerous approach to the verge of anarchy; for it is 
a fact that some errors take on by reason of age a sort of 
sacerdotal character. It may be possible, however, that if any 
of the ninety per cent who, first hearing private ownership in 
land questioned, are thoughtfully disposed, and follow the sub- 
ject up, ninety-nine per cent of them will come to one conclu- 
sion, namely: That private ownership in land is one of the most 
monstrous injustices that ever afflicted the earth! That un- 
counted millions have suffered, and that many millions still suf- 
fer this great injustice handed down from an intensely savage 
and brutally selfish era, is all due to the inertia of the human 
mind and its indisposition to think." 

"Each person born into the world finds the iniquitous sys- 
tem in full working order, and everybody apparently convinced 
that it is all right; and such a person accepts that whole propo- 
sition without a protest or murmur. It is one of the titanic 
errors that is accepted because it bears the label of tradition. 
If we had to deal with it at first hand, as did our savage an- 
cestors who had nothing to guide them but selfishness, we 
would unanimously pronounce the system monstrously cruel 
and unjust." 

Not less monstrous, but less excusable, is a private sys- 
tem of currency. 

The basis of prevailing wage rates is that of all value 
—Demand and Hindrance. Employers' need of more help 
does not raise wages unless Labor can ofifer a hindrance or 
demand for a certain amount. This hindrance is not auto- 
matically fixed by workers, but must be arbitrarily fixed 
outside of the natural working of free contract, aside from 
"supply and demand." 

10- 



152 RIGHT AND RICHES 

The labor union says to its members : ''When we all re- 
fuse at once, another will not take your place." What 
grander impulse ever caused action than unionism, that is, 
if it be true unionism., whose uniting cement is love. Talk 
of the patriotism of the soldier ! It is nothing to that of him 
who packs his tools to guarantee his fellows a fair price 
for their work. All honor to them. Unionism has said we 
must have more wages, then shorter hours, then more wages, 
then better conditions. Not "will you please?" but "you 
must." 

Working upon the following scientific platform, the 
American Federation of Labor should accomplish much : 

First. Free schools and compulsory education. 

Second. Unrelenting protest against the issuance and 
abuse of injunction process in labor disputes. 

Third. A workday of not more than eight hours in the 
24 hour day. 

Fourth. A strict recognition of not over eight hours per 
day on all Federal, State or municipal work, and at not less 
than the prevailing rate per diem wage of the class of employ- 
ment in the vicinity where the work is performed. 

Fifth. Release from employment one day in seven. 

Sixth. The abolition of the contract system on public work. 

Seventh. The municipal ownership of public utilities. 

Eighth. The abolition of the sweatshop system. 

Ninth. Sanitary inspection of workshop, factory and home. 

Tenth. Liability of employers for injury to body or loss of 
life. 

Eleventh. The nationalization of telegraph and telephone. 

Twelfth. The passage of anti-child labor laws in States 
where they do not exist, and rigid defense of them where they 
have been enacted into law. 

Thirteenth. Woman suffrage co-equal with man suffrage. 

Fourteenth. Suitable and plentiful play grounds for chil- 
dren in all cities. 

Fifteenth. Continued public agitation for public bath 
houses in all cities. 

Sixteenth. Qualifications in all permits to build in all cities 
and towns that there shall be bathrooms and bathroom attach- 
ments in all houses and compartments used for habitation. 



THE PRODUCER'S RIGHTS 153 

Seventeenth. A system of finance whereby money shall be 
issued exclusively by the government, with such regulations and 
restrictions as will protect it from manipulation by the banking 
interest for their own private gain. 

But having a platform does not assure success. Love is 
the only true bond by which men may be united. There is, 
unfortunately, too much of greed and hate, too much disre- 
gard of consumer and society in the practices of labor 
unions. Labor unions can never succeed, until they extend 
the scope of their purpose to both sexes and all races, and 
to consumer as well as producer. 

Captains of industry — managers of Concession's inter- 
est — may not lightly refuse the demands of organized labor. 
Most works on economics assume labor to be helpless, with 
no alternative but unconditional acceptance of concession's 
terms, or retreat to the wilderness. 

But the army of unionism does not so readily capitulate. 
It has wise leaders (as well as many unworthy ones, just as 
have government and all forms of social organization) who 
see that subsistence is provided for their campaign; who 
devise means of strategy and plans of siege to force their 
issues. But do not forget, Unionist, that you must be paid 
from the output. You must see to it that that continues to 
increase, if you wish to continue to advance. If you limit 
apprentices, you "kill the goose that lays the golden egg" 
Encourage invention! Invention helps you by increasing 
the fund from which wages come. 

But there is a weak point in the plans of unionism — a 
danger constantly to be reckoned with. This is the "army 
of the idle," which may ever be hired by aggregated pro- 
prietorism, as were the Hessians to fight our independence. 
If employment may be provided for this army the liberty of 
labor is won forever. Edward Markham says : 

"It is the first duty of a government to see to it that all of 
her people have the opportunity to live by labor. She must 
keep open the gates of opportunity, so that every man and 



154 RIGHT AND RICHES 

every woman may have the material resources for living a com- 
plete life. A government that fails in this, fails in the vital 
thing. 

"Progress and poverty have been yoke-mates from the most 
ancient times. There is an aver-grow^ing army of enforced 
idlers going onward in the shadow of civilization. 

"This is the pathetic fact of the modern world. Think of 
the able-bodied man knocking in vain at the door of life, beg- 
ging simply for the chance to live by the work of his hands. 
There are always tens of thousands of these hapless men. This 
is proved by the fact that an army of strike-breakers is always 
standing ready to swarm in, to take the place of strikers. Out 
in Colorado, a certain city furnished work for a drove of work- 
less men, and the shovels were piled upon the ground. The 
men were there promptly on the hour, and so eager were they 
for work that they fell to fighting for the shovels, breaking 
bones and shedding blood, so wildly fearful were the men that 
the shovels would not go round." 

"It should not be forgotten also that idle men are a con- 
stant menace to the public safety. Not only do the vagrant 
class drift down from this army of idle workers, but thieves 
and anarchists are recruited from these ranks. A man must do 
one of three things— work, beg or steal. If the labor market 
denies a man labor and the law forbids beggary, he sometimes 
forgets that the law also forbids stealing. Sometimes, too, in 
a government where a man cannot find work, he finds it easy 
to lose faith in government and go over to the anarchists who 
insanely hope to sweep away all of the laws of order." 

What causes this idle army? It is created and main- 
tained by selfishness, culminating in Concession's Preclu- 
sion. It is evident that this army is not an "army of lazi- 
ness," else they would not be ever ready to take strikers' 
places. They are prevented from v^ork by their lack of pur- 
pose and their submission to the repressions exercised by 
those who dominate the sources of supply. The reason of 
their idleness is given in the pitiful reply of the vineyard 
laborers of scripture, "Because no man hath hired us." It 
is sad, that to become producers, so many must depend on 
being hired; but it is a natural result of that domination of 



THE PRODUCER'S RIGHTS 155 

the field of production which enables owners to give an 
arbitrary "penny" to workers, and of the prevalence of the 
disposition to do nothing useful without pay. 

But if we may recover to society the natural opportun- 
ities now held idle by concession, so that when proprietors 
refuse the just demands of producers, they may have access 
to such opportunities, to start productive enterprises on their 
own account, and if, on the other hand, the masses may gain 
an impulse to effort based on the living truth that it "is 
more blessed to give than to receive," then the "army of the 
idle" will cease to exist. Then the laborer may become a 
free agent in contracting his services, instead of being help- 
less, as now. Then if Proprietorism does refuse to hire, it 
may not also, as it now seems to do, entirely exclude pro- 
ducers from the field of production. Then may labor assert 
itself and secure its natural wages. 

What would be the relations which should exist between 
Capital and Labor, if they, the two real productive factors, 
should get the whole product, except what is due Society 
as its Natural Rent? Under this natural system of output 
and diffusion, there may be found the following Natural 
Relations : 

First. There would ensue a continuously increasing 
output in proportion to the labor and capital employed. 

Second. This output, though larger in volume, would 
have a much less total value as measured in human endur- 
ance because the hours of labor would be shortened. Its 
money value would depend on the volume of money. 

Third. Output with the progress of industry naturally 
.tends to increase in a -greater ratio than the increase of cap- 
ital employed. 

Fourth. Natural wages tend to increase in proportion 
to the increase of output. 

Fifth. While interest naturally increases only in pro- 
portion to Capital Employed. 



156 RIGHT AND RICHES 

Sixth. Hence, wages naturally tend to increase more 
rapidly than interest and so to get a larger percentage of 
output in comparison with interest. 

Seventh. For while interest naturally tends to increase 
in proportion to the increase of capital, the rate of interest, 
being a percentage and not a quantity, does not tend to in- 
crease. 

Eighth. Rather, the rate of interest tends to decrease 
from the earlier stages of industry, until a rather ripe stage 
of development is reached. 

Ninth. But the percentage of output taken by accessage 
tends to increase as the tides of prosperity rise, until it de- 
prives both Labor and Capital of their Reward, and thus it 
stifles industry. 

Tenth. This is accelerated by the tendency of currency 
under our present system, to increase in volume and de- 
crease in value with the rise of prosperity. 




CHAPTER VI. 
Society's Rights. 

"Am I my hrother's keeper?" 

"Ye eat the fat, * * * * * dut ye feed not the flock. 
The diseased have ye not strengthened, neither have ye 
healed that which was sick, neither have ye l)Ound up 
that which was hroken, neither have ye brought again 
that which was driven away, neither have ye sought 
that which was lost; but with force and cruelty have 
ye ruled them." 

IVILIZATION is the right relation of citizens. Its 
highest ideal is the obedience to that command. 
"Thou shalt love thy neighbor as thyself." No 
high degree of civilization is possible without a 
general response to the religion embraced in this command. 
Civilization is the only remedy for the evils of density, or 
sparseness of population. When men are crowded together 
they need the results of the exercise of brotherliness as well 
as when but a few are alone in the remote wilderness. There 
need be no effort to either directly increase or limit popula- 
tion. Henry George well points out the natural instinct 
which reduces births as the causes of mortality are checked. 
Race suicide as regards numbers is not an impending calam- 
ity ; there is no danger of a lack of material men. Increase 
of normal, spiritual manhood is the vital work before us. 

Unless mankind is nearing the divine ideal — the image 
and likeness of the Maker — their increase in numbers is of 
no more benefit than the increase of rabbits. It has not 
been the numerous races, but the races with high ideals, 
who have advanced man's social welfare. The physical ag- 
gregation of great numbers of micn on limited areas does not 
by any means tend to their welfare. One writer has ad- 

157 



158 RIGHT AND RICHES 

vanced the theory that contact engenders "Social Love," as 
he terms it. Perhaps the right kind of contact does, but 
surely not physical contact. If crowding had promoted civ- 
ilization, the world had long ago been civilized. Surely the 
most crowded com.munities are not most, but least, civil- 
ized. The contact that elevates is spiritual contact, the con- 
tact of Love; and this love is not some blind animal force. 
True love is the ministering to our brother's need ; such love 
elevates both giver and recipient. Those who would learn 
more of this vital Social Love should read the writings of 
Paul and James and John. This true Love is being recog- 
nized to-day as never before as the greatest economic and 
Social force. Its efforts are being more beautifully and ef- 
fectually organized, and applied in fraternal, municipal and 
State undertakings. 

Civic improvement is no mere idle sentiment. It is the 
essential of progress and advancement. Beautiful parks, 
boulevards, streets, schools, libraries, recreation grounds for 
old and young, not only express the demands of a higher 
thought, but promote it. Civic improvement is as old as 
cities themselves, but civic improvement in the modern sense 
is a succession of steps toward a preconceived ideal in which 
individual acts of improvement are related to one another, 
and are bent toward the execution of a logical and unified 
scheme. Civic improvement is becoming a profession in 
which eminent intellects are engaging, and it is very profit- 
able from the standpoint of material prosperity. Working 
people do more and better work when living in the midst of 
beautiful and wholesome surroundings. It pays factories 
to have flowers over the walls of their buildings. A city 
which sets out for a high ideal of beauty, as Kansas City 
among others has done, attracts and develops a higher class 
of citizens than another city which neglects them. How 
does Concession repress and impede these enterprises? By 
despoiling society of her natural revenue, naturai rent. 



SOCIETY^S RIGHTS 159 

St. Louis has long contended with a Terminal Monopoly 
which exacts a toll from her commerce for crossing the river. 
This monopoly owns all the bridges, but it is now proposed 
to build a bridge with city ownership which shall be free. 
The principal bridge, designed by Captain Eads and known 
as the Eads bridge, is a continuation of Washington Avenue. 
But near this bridge on Washington Avenue, within a length 
less than 2,000 feet,, the land fronting on this one street 
exacts a revenue from commerce far in excess of the total 
taken by the bridge combine, with which press and platform 
have resounded. Think of it! This little space of land, 
exclusive of buildings, which no man helped produce, takes 
a tribute far in excess of the magnificent steel arch bridge, 
more than a mile in length, another railroad bridge, many 
engines, buildings, etc., a tunnel many blocks in length, and 
many miles of tracks; even though this terminal property 
pays upon a capitalization several times the value of all this 
visible property. 

Yet nothing is said of this landlord's tribute. 

While the rent of this tract is so great it is but a speck 
on the City's surface, nor is it the highest in rental value. 
Yet with all this immense value which the real estate of 
the city yields to its owners — value belonging mainly to so- 
ciety— (for most of its rent is Natural Rent or Use-pre- 
mium) her charitable houses are crowded almost like the 
prisoners were in the "Black Hole of Calcutta." Her 
schools are crowded for want of buildings, her streets poor- 
ly payed, her central parks crowded and tramped until the 
trees refused to grow, What if they get a free bridge ; will 
commerce be the freer? Perhaps, but will there not be a 
tendency to advance rents and absorb the saving? For con- 
cession, like interest, tends to average itself. 

The merchants of one city are compelled to compete with 
those of another, and if other rates are high, they cannot 



160 RIGHT AND RICHES 

also pay as high rents. What is true of St. Louis is true in 
greater or less degrees of all cities. 

Many can see no difference between an investment in 
Wealth and one in Concession. The rights of the buyer of 
land or stock in a franchised corporation, may be just to the 
extent of the price he has paid, so far as he is individually 
concerned; it is the same justice that property in slaves 
possessed. It would be wrong to deprive such investors of 
their property, but no one has a just perpetual right to any 
kind of property. The value of all property should return 
to the common fund at the end of certain periods. Wealth 
does so return, because the old is consumed and the re- 
plenishing must come through the channels of output. But 
Concession needs no replenishing; it grows in value with- 
out care. 

In speaking of the Astor estate. Barton J. Hendrick 
says : 

"Astor had invested about $2,000,000 in New York real 
estate. At his death its value was $20,000,000. When William 
B. Astor died, in 1876, it had increased to $100,000,000. By 
1890 competent authorities estimated it at more than $250,000,- 
000. The total Astor holdings now distributed among several 
branches of the family, amount to at least $450,000,000. Here 
evidently, we have a most notable instance of the unearned 
increment. When John Jacob Astor died, the New York Her- 
ald, in an editorial article, gravely suggested that his property 
be divided in two parts, one-half to go to his heirs, the other 
to the City of New York. For it was not Astor's energy or 
genius, said the "Herald," which had made him so rich; it was 
the city's commerce, its fashion, its men of enlightenment and 
progress, which had converted his goat farms and swamps into 
the richest rent-bearing soil. The owner of great railroads or 
steel corporations must constantly nurse his fortune, must join 
in the competition for improved methods and the indispensable 
men. Under these conditions a great fortune is a great burden, 
maintained only by constant vigilance. The whole Astor fam- 
ily, however, could sleep for a hundred years, and at the end 
find that their riches had grown a hundredfold. All the eco- 



SOCIETY'S RIGHTS 161 

nomic and social forces which have made New York the Ameri- 
can metropolis, have entirely, without their instigation, also 
made their wealth." 

A striking example of this deprivation of humanity by 
the Concession interest is exhibited in Los Angeles. Per- 
haps history does not give another instance of such growth 
in population for a period of ten years as Los Angeles had 
from 1896 to 1906, and with this growth such an exploita- 
tion by the real estate interest. Millions of lots were platted 
from land which recently cost the exploiters a nominal 
price per acre, and through the unprecedented influx of peo- 
ple, was concessionized up into the total of hundreds of mil- 
lions, and sold to those who sought to enjoy the glories 
which Nature has there provided. Yet with all this accre- 
tion of unearned riches, the stewards of The Public's in- 
terest sat by and failed to claim the thousandth part of so- 
ciety's share. To-day the city finds itself almost a municipal 
pauper, without public buildings, without parks, and sewers, 
its streets rivers of mud when it rains; its jail a foul center 
of pestilence from inadequate space and sanitary accommo- 
dations; and the overcrowding largely occasioned by law- 
lessness caused by the desperate results on her business in- 
terests of this reckless exploitation. 

Los Angeles will recover from this condition and set her 
house in order, but the cost will be paid by owners who have 
paid hard dollars for their land, instead of from the un- 
earned increment. 

Every city in our land has had the same experience in a 
degree, but every city has not had the natural requisites to 
create an Earthly Paradise. Nor have these exploiters as a 
rule had much permanent gain. Many of them are now pen- 
niless. 

The time has come for society to claim her own, and 
with this plenteous fund make cities fit for human habita- 
tion. Jefferson said : "The art of government is merely the 



162 RIGHT AND RICHES 

art of being honest." But it is impossible to be truly honest 
without the adoption of scientific principles as a basis of 
action. 

As one cannot rightly administer the affairs of another 
without a definite knowledge of the affairs which are his; 
no more can he the affairs of a city or State, without a 
scientific knowledge of what constitutes its rightful estate. 
And science teaches that this estate of Society includes the 
whole of Natural Rent. Yet this plethoric fund is but part 
of her rightful revenues, for she is the sole, rightful and 
indisputable heir of all the wealth of past ages. Society has 
no need to beg for revenue, to impose on her useful and pro- 
ductive children for burdensome rates of revenue, nor to 
skimp and economize in the furnishing and provisioning of 
her house. She is rich beyond the wildest dreams of ro- 
mance. Will not you, dear reader, be one of her attorneys 
to insist on her claims to this great estate ? 

Be:uk:? and Practice. 

Is the ownership of and receipt of the revenues from 
concession inconsistent with belief in the foregoing prin- 
ciples ? 

Tom T. Johnson was reproached with getting a fortune 
from protected industries while preaching against the iniqui- 
ties of the system; yet his position was consistent, for he 
used such income to help support the reform. It is likewise 
consistent to believe in the injustice of our land and fran- 
chise laws, and yet take revenues from holdings under such 
laws, if we use such revenues unselfishly. 

Why should all of such revenues be resigned to the 
wholly selfish? Further, while such concession exists, it is 
a burden and a tax on all our legitimate efforts, and it is in 
a measure our duty to recoup ourselves by securing some 
share of accessage, just as we might protest against the des- 



SOCIETY'S RIGHTS 163 

truction of forests or game, and yet justify ourselves in par- 
taking of such forests or game while there are no laws to 
prevent their wasteful use. 

We are entitled to some share of the increase given by 
land and social resources — everyone is ; and we may rightly 
secure to ourselves a share even before we are able to guar- 
antee it to everyone. 



PART FIVE. 



Reclamation. 

Chapter I. Patj^rnai^ism. 

" 11. TiTL^ Limitation. 

III. Units, Monopoi.iks, Pubuc Owne^rship. 

" IV. TiTLt and Tim^. 

" V. Taxation and Compi:nsation. 

" VI. QUANTITIV^ T1TI.E: Re:STRICTI0N. 




CHAPTER I. 

Paternalism. 

HE noble-minded Ruskin perceived the unfairness 
of die prevailing commercial system. But Con- 
cession in his time was not so nearly developed, 
not so nearly ripe for elimination, as to-day. He 
recognized brotherhood as the natural relation of man to 
man, a relation the opposite of the devouring greed of ram- 
pant commercialism. He pointed out the failure of the 
Erench attempt at fraternalism, because it lacked * 'paternal- 
ism" (as he terms it), a condition precedent to fraternalism. 
What is paternalism? We hear much sarcastic com- 
ment on ''paternalism" these days, when reforms are pro- 
posed. The term as commonly used in such connection, im- 
plies a sort of fatherly pampering or partiality on the part 
of government to a certain element or class of citizens. 

When labor asks for laws which it deems necessary for 
its protection, the cry goes up : "Paternalism ! Paternal- 
ism !" When laws are demanded to protect childhood from 
the modern Moloch, the devouring factory, there is a loud 
cry of paternalism! When public lands, minerals or other 
wealth would be reserved for public good, there is the same 
cry. 

Now Ruskin had a perfect conception of an ideal pater- 
nalism, however crude in its details his political economy. 
His idea of paternalism, was such a government control and 
management of "the great estate our Father has devised to 
us all," that it should not only prosper to the greatest pos- 
sible extent, but that the results of its plenteous output 
should be shared by all, due regard being taken for the 
merits of each brother or sister. 

-11 167 



168 RIGHT AND RICHES 

A healthy social structure is not built up by using in- 
dividual men as the bricks thereof — resting an appalling 
burden upon those below, that those above may attain to em- 
inence; but rather, as St. Paul has so beautifully portrayed 
it, society is a vital, living organism, and individual men are 
its members as illustrated by the members of our bodies, 
each contributing to the nourishment, well-being, harmony 
and beauty of the whole body, and each dependent on the 
whole. 

"And whether one member suflfer all suffer." But under 
a system based on individual greed, some men are merely 
parasites on the rest. 

Down with an elevated class which is a burden on those 
beneath ! 

The powerful owner of great riches is commonly and 
justly censured for his greed when he looks to the procure- 
ment of legislation promoting his advantage. But, my 
dear brothers and sisters who toil for a meagre wage, ex- 
amine your owa hearts. Are you less selfish? How much 
thought do you give to your fellow toiler's condition? Ex- 
amine your own desires, and see if you do not covet property 
for the power which it gives to dominate others. Judgment 
must be given against you that the primal and continuing 
cause of your enslavement is your own avarice rather than 
the greed of the big magnates. Your greed to get wealth 
solely for selfish consumption. And this is the evidence 
which condemns you : That while you hold the voting 
power wholly in your own hands, yet through your greedy 
indifference, you neglect to inform yourselves of the prin- 
ciples of government, or of the legislation which your en- 
slavers procure ; you even neglect to vote. 

If you would be free, you must get free along with your 
fellows. Then in the name of Heaven, READ ! THINK ! 
ORGANIZE! 



PATERNALISM 169 

Organize not alone labor unions, but clubs, societies, as- 
sociations, to protect, educate and elevate mankind. If your 
union organization or government is infested with grafters, 
rout them out ! Attend the primaries ! Vote ! Govern the 
land for Humanity! 

One object of this volume is to advocate some systems 
of legislative reform for the reclamation of our birthright 
in this wonderful estate, bequeathed us by our Creator, the 
fruit of which is being taken by concession. I am not going 
to advocate a system of paternalism, which is expressed in 
the mother bird who is afraid to push her brood from the 
nest ; for no one wishes the government to maintain a help- 
less class of grown-up infants on a figurative nursing bottle. 
Rather I wish to advocate the abolition of all laws which 
support "pets.'' 

Let us, then, rather demand the ideal, true paternalism 
of Ruskin ; and what is needful to introduce it, but the 
abolition of -favoritism ? 

Certainly "one may not lift himself by his boot-straps," 
nor are the means of subsistence and luxury created by law. 
But legislation, which repeals such laws as permit the few 
to impede and destroy, to despoil and deprive the many, will 
introduce true paternalism — will provide bountiful supplies 
for all. 

I would simply recommend that no laws be passed grant- 
ing franchises for the operation of certain, simple services. 
I would recommend the repeal of laws which extend title 
beyond the life of him to whom it is granted as a reward of 
his service; of those laws which despoil and discourage in- 
dustry by taxation of capital, and by imposition of licenses, 
tariffs, and other unjust burdens ; of laws which give a dom- 
ination of great expanses of natural opportunity without re- 
gard to use; of laws which uphold estates grown in extent 
beyond the enjoyment of their owners. I would repeal all 
such falsely paternalistic laws, and let humanity come natur- 



170 RIGHT AND RICHES 

ally into its rightful heritage, unhampered by favoritism. 
These are not new or untried theories. Yet it need not be 
expected that legislation alone, however wise, will perfect 
mankind. The discussion of progressive legislative reforms 
does, however, help to elucidate sociological principles and 
their enactment into statutes tends to develop an improv- 
ing civic thought by making ideas fixed and tangible. 




CHAPTER II. 

T1T1.E: Limitation. 

jAVING noted the present methods by which con- 
sumers, producers and society are robbed of their 
rightful enjoyment of output, what means can be 
suggested to restore these losses? 

That title to all property primarily inheres in Society is 
our basic postulate. Therefore, only society can confer 
title. 

Title does not emanate from labor, any more than from 
capital or concession. Society now decrees title to reward 
labor and capital, and confirms into title the claims made by 
concession. Those who "howl paternalism" the loudest are 
they whose wealth is founded on the favoritism of govern- 
ment. 

But when we seek for the basic equitable principles of 
title and the laws which should naturally govern title, we 
find that the agent of society — government — has no just 
right to give perpetual, or absolute, title for any cause. That 
the most that may be naturally and equitably done is to give 
an "easement" or a preferred temporary right to use prop- 
erty, to him by whom it is merited. 

This awfully sacred thing called "title," or property 
rights, is the real incubus on civilization. 

Parents may have several children and a home with a 
number of rooms. They may assign one room to Johp. and 
another to Helen and another to Kate. Other brothers and 
sisters being too young need no separate rooms. But how 
foolish when John or Helen go out into the world to be gone 
for several years, or forever, to hold their rooms unused, a 
prey to moth and mildew, while the younger children, now 

171 



172 RIGHT AND RICHES 

grown up, are suffering for their use. Why any more should 
society, our common mother, apportion the use of her estate 
for all eternity to certain individuals and their descendants? 

Title's exclusiveness needs reforming as much as its dur- 
ation. At the very best we can only concede a temporary, 
partial private possession and control of things for any con- 
sideration. The rights of Society must at all times be para- 
mount. This principle is rapidly being recognized. For- 
merly the owner of land had the right to inflict capital pun- 
ishment thereon. What he may do or allow on it is con- 
tinually being restricted. 

Why should title give to the land owners of a district 
the authority to say whether saloons should be licensed 
therein; or franchises granted; or nuisances maintained? 
Many States are taking away these prerogatives of realty 
owners. Many cities are prescribing rigid rules as to what 
one may build on his own lot, as to its sanitary conditions, 
its liability to burn, its nearness to the curb line, etc. In 
Kansas City one is liable to arrest for hitching his horse to 
a tree in front of his own lot. 

But the greatest care should be taken in these restrictions 
not to impose rules burdensome to the whole people. 

These simple and beneficial limitations are only a be- 
ginning, but they denote some perception of the true char- 
acter of title, and as there grows a broader apprehension 
of it, they may be so extended as to recover to society much 
of its natural rights in property. Controllers of public serv- 
ice corporations reluctantly admit society's rights to control 
what is "one's own ;" but Society has a right to enforce her 
Domain of Greatest Use. 

Title should only extend to the individual along such 
lines and under such restrictions as will guarantee the great- 
est common good. 

But precedent dies hard in our courts. Many court de- 
cisions are based on the farce comedies of history. Title 



TITLE LIMITATION 173 

may justly emanate only from the people, and at the end of 
a season, like the leaves from the trees, must return to its 
source. 

Every private interest should be subordinate to the pub- 
lic good. This does not imply the communistic doctrine 
which seeks the elimination of private property, but rather 
aims to make private property more universal and abund- 
ant. All have an inalienable right to live, but this does not 
mean that rations should be issued to the individual as in 
time of calamity or siege. The true principles of fairness 
rather encourage each family to own its home, to accumulate 
capital, to be diligent in business. 

That the only right to subsistence is that bought by 
labor, is one of the most pernicious of doctrines. All have 
a right to partake of the glorious bounties which God has 
given. Each one has this right before he is able to work. 
But all who are able to work owe it to Society to do so, 
and acquiring property by any lucky cause, cannot cancel 
that obligation. 

The principle of ''eminent domain" should be extended 
to individuals, as well as municipalities and corporations. 
Anyone should have the authority to condemn property for 
any useful purpose. Naturally, statutes giving such power 
should also impose such restrictions as would insure justice. 
One should not have power to condemn another's home, 
simply to use it for his home. It should always depend upon 
a superior use being made of the property condemned. This 
remedy offers a most effective weapon against trusts. But 
it is especially effective against the engrossment of large 
tracts of land. 

Why should not a gardener or a fruit grower have a 
superior right in land to one who makes little or no use of 
it? Why has any one a right to hold idle tracts of land 
anywhere in the way of progress and improvement? Nor 
would I limit such condemnation to the purchase of such 



174 RIGHT AND RICHES 

lands, but I would give the right to condemn their tempor- 
ary use, upon payment of the rent adjudged to be fair. 
Had the Irish this power, they could not be evicted as they 
have been to make room for pastures and game preserves. 
The most effective course along these lines is that pursued 
in Australia and New Zealand where the State has con- 
demned and subdivided the large tracts. 

Many industries, as they expand, are obstructed by the 
owners of the land they require, though it may be almost 
worthless for all other purposes. Access to waterfronts, to 
railroads, harbors, roads, is often controlled by the title to a 
small strip of land. In some States the water supplies 
needed to produce crops upon arid lands, or even to supply 
cities, are most shamefully allowed to be appropriated and 
wasted. 




CHAPTER III. 

Units, Monopoue:s, Pubi^ic OwN:eRSHip. 

ECOGNIZING the universal,, primal title of society, 
many great lovers of humanity have advocated the 
common holding of all wealth by the community — 
communism. One of the most complete exposi- 
tions of a plan to carry this idea out is Edward Bellamy's 
"Looking Backward." But there are radical limitations to 
the practical success of both "common" production and 
"common" use. 

Much property is only susceptible of use individually. 
Clothing, furniture, houses for home use and innumerable 
personal belongings are valueless if not devoted to the spe- 
cial use of one person or one famxily. We may adapt our 
personal property to our special requirements. Then again 
many things which may be used by many in common give 
much greater satisfaction if allotted to the use of one person. 
A livery horse is not so satisfactory as one kept and trained 
to the usage of one person. A hotel is not like a home. 
Books may be used at a public library with much satisfac- 
tion, but not so much as to entirely make a private library 
needless. 

Then again, many arts are much more satisfactorily pur- 
sued privately. This applies to a large degree in agriculture. 
The cultivation of a large tract with hired labor is seldom 
nearly so successful as when subdivided into many small 
tracts, each worked by its owner in person. Targe depart- 
ment stores fail to give the satisfaction to shoppers that 
small tradesmen are able to give. They are now very suc- 
cessful in many places, and are able to make many econ- 
omies, and sometimes lower prices, but it is very likely that 

175 



176 RIGHT AND RICHES 

they will be replaced soon by small tradesmen under some 
co-operative renting arrangement. 

The individual by working under his own direction is 
able to give a character to his work. He is encouraged to 
see and take advantage of processes and methods, impossible 
where subject to the control of a distant authority. 

But there is a limit to the advantages of this personal 
interest. Many working together are enabled : First, to di- 
vide the various processes of the undertaking so that each 
may do some part for which he or she has more special apti- 
tude. In a factory, one may successfully buy stock, another 
manage machinery, another sell output, another keep the 
accounts. Secondly, by combining together, they may pro- 
cure equipment, impossible for single individuals, either to 
buy or to use, separately. 

The ability to have the required capital to furnish equip- 
ment and get adequate stock to work upon may be provided 
by joint stock companies or corporations. Each individual 
puts in his portions or shares of so many dollars for which 
he is supposed to share proportionately in the net profits. 

But corporations do not pretend to divide profits with 
any but stockholders. Those who operate their plants are 
hired at the lowest market price, often at scant living wages, 
while the company makes large profits. Attempts have been 
made to correct this defect by forming co-operative societies, 
or corporations in which none but workers hold stock or 
share profits. There are many radical difiiculties in putting 
this into practice, one of which is the impossibility of agree- 
ing on a basis of division in proportion to what workers 
contribute to output. Some have attempted to give a stipu- 
lated salary to each operative and then divide profits in pro- 
portion to salaries. This may be somewhat more attractive 
than simply paying higher wages, but operatives usually 
seem to have little appreciation for it, regarding the profits 
divided as charity. Some co-operative societies have, how- 



UNITS, MONOPOLIES, PUBLIC OWNERSHIP 177 

ever, been measurably successful. That is, they have grov^n 
to do quite an extensive business. But even they have not 
included consumers in their sharing. In many cases they 
have failed through cumbersome methods which have an- 
noyed patrons and have failed to regard the necessities of 
commerce. 

In both corporations and co-operatives private initiative 
tends to decrease as the business extends. The only private 
initiative which is likely to be very effective in a great in- 
dustry is the controlling stockholder. The Public, may with 
.good reason expect to hire managers as progressive for 
publicly operated enterprises under reasonable conditions. 
Competition should not be confused with Exci^i^aTion. 
Competition as defined by Webster has two phases of 
meaning; the first, striving between two or more for the 
same thing of value; the second conveys the sense of un- 
selfish desire; to excel, or outdo in quantity or quality of 
excellence, but Bxcelation better expresses this latter mean- 
ing. 

The theory of competition is that each concern, animated 
by a desire to get as large a share of trade as possible, or all 
of it, will cut down prices and try to undersell the other. 
This implies that each must strive to cut down the cost of 
the product by cutting down wages, and quality of output, 
too, if it may be done without discovery. This selfish com- 
petition, like all war, when carried to its logical conclusion, 
means the annihilation of all but one of the contending par- 
ties; in other words, that the survivor shall be a trust or 
monopoly. This is a consummation worthy of the primary 
impulse of competition. 

Selfish competition, like everything else founded on 
avarice, is a failure. Greed is not a healthy, normal, in- 
spiration. Its natural results are deception, injury, waste 
and destruction. 



178 RIGHT AND RICHES 

Among the accompaniments of competition are wasteful 
advertising and dishonest methods of getting business. 
Grafting, rebating, and various methods of commercial slug- 
ging of rivals ; cutting of wages, working of children, sweat- 
shop production. 

In order to defend this destructive system, instances are 
cited of the good results of laudable efforts to excel. But 
that is not competition. The effort to excel is indeed the 
life of trade. It is a stimulant to industrial progress that 
should be encouraged. But selfish competition not only 
does not encourage "excelation" but is most destructive 
of it. Everything that tends to promote the highest excel- 
lence in products should be supported. 

But have we not seen abundant evidence of the worthless 
trash resultant from strenuously selfish competition? "Ex- 
celation" means the setting up of standards and their con- 
stant elevation toward the highest conceptions of excellence. 
But it does not in any sense mean the reduction to the low- 
est levels of price, even at the cost of honor, honesty, and 
the destruction of the best standards of civilization and hu- 
manity. It does not mean getting trade irrespective of hon- 
est wages, honest goods, or honest methods, 

"Excelation" holds up to child and adult the illustrious 
achievements of heroes in all lines of science, invention, art 
and progress. The evils of Trusts are not overestimated, 
but the remedy is not selfish competition ; for Trusts are but 
the culmination of competitive greed, not alone the greed of 
the few who organize them, but the greed of the whole com- 
munity. 

If the present heads of trusts were all banished and the 
corporations dissolved, think you that they would not im- 
mediately spring up again from the conditions which first 
produced them? 

The very assumption that reasonable prices for good 
service, or good goods, can be maintained by greed, is too 



UNITS, MONOPOLIES, PUBLIC OWNERSHIP 179 

absurd on its face for consideration. But the evil of trusts 
is not that they put an end to selfish competition. Indeed, 
this is the only commendable thing that may be said of them. 
This result is like that of the termination of petty tribal 
wars by the triumph of some more powerful chief ; which at 
least brings about a cessation of destructive strife, though it 
does not institute justice. Greed formerly had a more per- 
sonal expression in individual "boorishness." It is now com- 
ing to a head, is more nearly ripe for expulsion. It is mani- 
fested more in organized form, but it is not less an expres- 
sion of individual covetousness, widespread among the peo- 
ple. Our President has wisely said that greed is the great- 
est danger which confronts our Nation. Covetousness is as 
radical a sin as murder and must be so recognized. 

In order to compete, the apple growers in some dis- 
tricts put a few good ones on the top of the barrel. In 
order to excel, the apple growers of Hood River, Oregon, 
pack the barrel straight through with precisely the same 
kind, with the result that Hood River apples bring almost 
double on the New York market. It is the effort to excel 
that has made the products of different cities famous — the 
china of one, the cutlery of another, the butter, lace, linens, 
etc., of others. 

The excellence guaranteed by certain brands of hats, 
shoes, collars, etc., make people demand them. To get trade 
thus is praiseworthy, but the attempt to compete against 
honest goods by offering shams and shoddy goods at low 
prices, is degrading. The right of the consumer to procure 
his needs from the best and most available supply is incon- 
testable. No infamous tariff law framed in the interests of 
unjust holders of natural raw materials — holders of forests, 
mines, or soil — whether purporting "to protect labor" or "to 
raise revenue," can be justified by reason or experience. Yet 
does not the selfishness of the majority support the tariff? 



180 RIGHT AND RICHES 

God made trade free. Every instinct of true manhood 
is for removing the barriers to trade, whether they be ob- 
structions in waterways, unjust carrier charges or any of 
the despoihng forms of taxation of trade or industry, such 
as tariffs, Hcenses, taxation of the results of industry, or the 
repression by trusts or holders of idle or half-used lands. 
Only greed of the most destructive and vicious type desires 
to curtail output and use of things desirable. But trusts 
would not be wholly prevented by removal of the tariff. 
Many are international in scope. 

There is but one remedy for trusts. This is to give peo- 
ple access to such a supply of each product as would best 
satisfy the demand. If monopoly has made it impossible 
for private interests to do this and exist, then government 
should take the field and offer such supply. But govern- 
ment will not unselfishly provide such supply until the people 
it represents are less selfish. Happily, people are advancing 
along this line. 

Ruskin had a beautiful conception of this problem, even 
though trusts were hardly known in his day. He com- 
plained of inability, by reason of dishonest trade methods, 
to procure honest wares in certain lines — among others, art 
materials — and suggested that the government produce such 
things of fine quality and offer them for sale at a liberal per- 
centage of profit, stamped with the quality. Private con- 
cerns could not then hope to sell other than a good quality 
of such things. 

No more reasonable, simple or sure solution can be imag- 
ined for the trust evil. In this manner cities could easily 
defend themselves from such abuses as an ice or milk monop- 
oly. This remedy would not only restore the right price, 
but the right quality of such things. 

Unitization is not always, however, an evil per se. 
Rather it is often the only rational method of supply; for 
good service in many lines depends on the uniting of service. 



UNITS, MONOPOLIES, PUBLIC OWNERSHIP 181 

Telegraphs, telephones, railways, postal service is radically 
reduced in efficiency by division. 

Of what use is a sleeping car if it does not carry us at 
least all night ? Or a telegraph if it does not reach all wish- 
ing to communicate? If there are two telephones, we must 
pay for both or be in communication with subscribers of but 
one system. It has been lately officially recognized that rail- 
roads may not be successfully operated without at least 
making a unit of their freight service. As production be- 
comes more natural, as the brotherhood of man is more rec- 
ognized, the means of supply tend the more to become units. 
Brotherhood means unity. 

Means of communication, transportation and travel are 
most essentially units. Every citizen of a city has increasing 
need of telephone connection with every other citizen of the 
same city. 

The excellent article on "Trusts" in Cyclopedia Ameri- 
cana points out this natural evolution of units as operated by 
trusts, and the further fact, that this "unitizing," being the 
result of natural and deep-seated laws, cannot be suppressed 
by stupid superficial laws. 

Every American has with the progress of time greater 
need of railroad, mail, telegraph and public highway com- 
munication, not only with every other American, but with 
the whole world. Automobiles have given a great impetus 
to this desire for intercommunication. 

As the necessity of these imit services grows, so the 
value of the franchises controlling them grows. This value 
should naturally accrue equally to every citizen. But during 
the life of a franchise it accrues solely to its owners. 

Consider the enormous value of telegraph, telephone and 
railway franchises. These should be recovered to the pub- 
lic. At greatly reduced rates they would give enough net 
revenue to pay all expenses of government, while paying the 



182 RIGHT AND RICHES 

same wages as now, if it were desirable to raise all revenues 
so. 

There is no moral restriction against the public supply 
of the people's needs, even though it do make worthless, 
franchises and concessions of vast value, based on excessive 
charges. Would it be wicked for you or me to privately put 
on the market a supply so cheap as to break up such es- 
tablished interests ? Then why is it wrong for the public to 
institute such service? 

Why should a certain fictitious value be recognized as a 
basis for the rates of a monopoly service corporation simply 
because there are a few innocent stockholders, without re- 
gard to the million innocent patrons? Rates for transpor- 
tation, communication, electricity, etc., should be gradually 
reduced to what will pay liberal interest on the value of the 
tangible physical property at present cost of its duplication. 
The German Minister of Ways recognized the justice of this 
principle and likewise how to apply it. For when private 
ownership of railroads became detrimental to progress and 
he began to negotiate for their public purchase, he was 
asked fictitious prices, he at once began preparations for 
their paralleling. This brought the "varmint" out into the 
daylight. Their purchase was then made without further 
difficulty, but, fortunately for Germany, they are not ham- 
pered by a Supreme Court as we are. 

When this new and just principle is established, it will 
be notice to the purchasers of such stock not to expect div- 
idends from the spoliation of the people. 

Many reformers are too careful to state their respect for 
the prerogative of established interests and for property 
based on concession; that such property is as just as any, 
and should pay no more taxes, etc. This is like the ante- 
helium talk about slave-property. Will such persons state 
whether the standard of such property shall be based on 
market value after or before a panic? 



UNITS, MONOPOLIES, PUBLIC OWNERSHIP 183 

Mayor Carter H. Harrison, of Chicago, made an ad- 
dress to the Yale law school on "Some Phases of the Mu- 
nicipal Problem," in which he laid down seven principles so 
axiomatic that they might be termed the seven civic com- 
mandments. They are: 

"1. Public property is worth to the people dollar for 
dollar what private property of the same character is worth 
to its owner. 

2. The municipality is greater than any corporation to 
which it grants rights. 

3. The demands of the individual, whether it be a 
single man or the artificial entity known as a corporation, 
must be subordinated to the requirements of the mass of 
the citizens. 

4. Public service should be directed toward providing 
the greatest good to the greatest number. 

5. The commandment *Thou shalt not steal' should not 
be applied merely to the property of individuals. 

6. The boodling of a franchise through a city council 
is no less dishonest than the burglary of a neighbor's house. 

7. The corrupter of an official stands no higher in the 
sight of God, nor should he stand higher in the eyes of man, 
than the official who betrays the public confidence by the ac- 
ceptance of a bribe." 

The revenue which service plants derive is not the only 
loss to the public. A greater loss is the lack of good serv- 
ice. Contrast the grade of service given in a $1.00 telegram 
and a 3c letter, collected and delivered by men who pass ex- 
amination for ability. Telegrams are delivered by boys who 
can scarcely read or write the simplest words, coming to us 
so dirty, misspelled, mispunctuated that their meaning is 
often obscured. 

The petty charges of telegraph and express concerns for 
delivery on prepaid service is often enough for the service. 

12— 



184 RIGHT AND RICHES 

It is needless to point out the defects of service to the 
strap-hanging passengers of car lines; to the overcharged 
patrons of duplicate telephone systems, or users of the in- 
termittent gas supply of private companies, who never know 
whether they may have their meal wholly cooked, to say 
nothing of the bills. 

That the benefits from the blessings which God has so 
plentifully provided — the rich stores of nature and of prog- 
ress — may be best diffused among all mankind, it is impera- 
tive that many kinds of property be restored to the common 
ownership of society; that it be controlled and operated en- 
tirely independent of private interest. This is Public Owner- 
ship, but it remains to some extent a question of expediency 
what should be so undertaken. 

We hear that without private enterprise we would have 
no gas, electricity, etc. Public Ownership does not con- 
template the discouragement of private enterprise, but fran- 
chising of corporations does. Did the railroads adopt safety 
inventions until compelled to do so by law? Do they yet 
lend special accommodation to the small coal miner, or oil 
producer, or cement manufacturer? Why can an old, rich 
concern in New England compete in California with a su- 
perior natural supply thousands of miles nearer? Simply 
because young enterprise has no show for transportation 
over private ways in competition with vested interests. 

Has experience proved Public Operation a success? 
There are some apparently great failures ; but these are often 
farces. The absurdity of expecting old, rotten barges on the 
Erie Canal to compete with and compel a reasonable rate on 
railroads, when these barges require several men and several 
mules two or three weeks to go from Buffalo to New York 
with less than two carloads, is evident. Nor will much 
more be accomplished when the State of New York spends 
enough on the canal to gridiron the State with railroads. 



UNITS, MONOPOLIES, PUBLIC OWNERSHIP 185 

Four modern railroad tracks will do more hauling than ten 
inland canals. Canals are a relic of primitive times, unless 
they allow the passage of ships between two great water- 
ways, as the Panama Canal purposes to do. Various States 
have owned pieces of railroad which were failures. They 
were not units. But there are many great successes. The 
test of success with a public enterprise is not that it make 
money or lower the tax rate; its main object is better and 
cheaper service. 

Toronto is well satisfied with its experiments in public 
ownership. Its waterworks yield a profit, though the charge 
has been reduced to $2.40 a year for an eight-room house 
and $4.20 for a 10-room house. The street railways, munici- 
pally owned, but leased to a company, paid 5 per cent, on 
the stock and, in addition, turned $235,447 into the city 
treasury in a year. Gas in Toronto is 80 cents a thousand, 
and the city has decided to build its own plant unless the 
price is reduced. 

One direction in which the substitution of public for 
private monopoly is most certain to be a success is by elim- 
inating graft. Most of the official graft now originates 
from bribery by franchised corporations seeking extensions 
of privilege, or protecting those held. 

What greater success could be expected than the Postal 
Service? Though there is often an apparent deficit, we 
must remember that the mail is used for much free public 
service, which would cost millions if the postoffice were 
private. Tons of public documents, seed, etc., are carried 
freely. 

What better example of success could be had than the 
public schools? How would education have flourished 
without this great boon ? It needs further extension in free 
books and free noonday lunch to all pupils, not as charity, 
but as the most economical means of supplying these needs. 



186 RIGHT AND RICHES 

After two years' investigation of practical results both 
in Europe and America, the Committee of the National Civic 
Federation have just made a report as follows: 

"That the four leading public utilities, gas, water, electric light 
and power, and street railways, the only ones they investigated, 
cannot be suitably regulated by competition. 'Legalized and 
regulated monopoly,' whether under public or private owner- 
ship, is necessary. Of the sort of industry suitable for public 
ownership, they say in the first place, 'Undertakings in which 
the sanitary motive enters largely should be operated by the 
public,' since it is dangerous to allow any one to make a profit 
out of a public utility which affects the health of the citizens, 
and the public operation of these utilities must not consider 
merely the profit to be made. The Commission believes that 
franchises should be granted for only a limited time, with the 
provision that the public may buy them out at a fair valuation. 
The Commission believes in the widest publicity of the accounts 
of public service corporations, and that they should issue new 
capital only with the permission of public authority. In order 
to isolate municipal undertakings from politics the Commission 
recommends that the municipality employ an executive man- 
ager, and that the finances of the undertaking be separated 
from those of the rest of the city. The municipally owned 
business should be as distinct from the rest of the city gov- 
ernment as is the privately owned." 

It is argued against public ownership that it incurs debt. 
What is a debt? Something that absorbs production. Do 
not franchised corporations absorb? A debt may be event- 
ually paid or its rate reduced. Franchises continue to ab- 
sorb if they are not themselves publicly absorbed. They are 
bonded for several times the cost of improvements and the 
patrons must pay the interest. 

But is there not danger in "Government paternalism?" 
Is not this going into business contrary to the traditions of 
government? Surely it is, but government was traditionally 
and historically instituted to allow the privileged class to 
prey upon the rest of mankind. Happily its purpose is be- 
ing somewhat changed. Senator Beveridge said, in appeal- 



UNITS, MONOPOLIES, PUBLIC OWNERSHIP 187 

ing for protection from the blighting effects of childhood 
labor, ''The Constitution was made for the people, not the 
people for the Constitution." It is not so certain that it 
wm, but it is unquestionable that it should be made for 
them. There was nothing ever done by man that may not 
be improved in the light of experience. 

We should extend our advantages and comforts in ev- 
ery possible way. Our cities should supply transportation, 
telephones, gas, electricity. The time is not far distant when 
they will supply heat, compressed air for cleaning, refriger- 
ation and other uses ; when they will cut lawns, plant trees, 
remove all rubbish, wash all streets, conduct funerals, own 
cemeteries and do innumerable things scientifically and ef- 
fectively. 

Why should not all the people in common do everything 
for all the people which they can do collectively more effect- 
ively or cheaply? 

There should be no attempt to make a profit on such 
service as is to the common interest to have done thoroughly. 

Whatever is demanded in something like equal propor- 
tion by all, which may not lead to waste or extravagance 
at public expense, may perhaps be free. For instance, clear- 
ing of garbage, ashes, sprinkling of streets, etc. ; providing 
play grounds, boating lakes, rest stations, drinking foun- 
tains and music rooms. But broader opportunities are good 
hard roads, reforesting of hills, reclamation of swamps, and 
the general beautification of city and country. The eft'ort of 
philanthropists as well as municipalities to provide cheap 
and good flats in congested districts is a mistake. It will be 
much more easy and effective to relieve the congestion. 
What creates congestion? 

Manifestly it is the employment given near such old 
shacks as are rented cheaply. The remedy is to move the 
employment to the suburbs and condemn the shacks as a 
place for parks. The money some generous rich men are 



188 RIGHT AND RICHES 

spending to provide model tenements, if spent to induce 
industries to move out of congested centers, would relieve 
thousands where the model tenements but slightly relieve 
few. 

High buildings tend to congestion. Building restrictions 
if honest are of great benefit. No two houses after the same 
plan should be allowed in the same block. 

Robert Hunter ihinks that capitalism (proprietorism) 
will soon go the way of "other class systems." "Lawson," 
he says "sees its frenzied finance; Hughes sees its robbery 
of the widow and orphans ; Hearst sees its political treach- 
ery; Steffens sees its political perfidy; Miss Tarbell its soul 
of dishonor and hypocrisy; Robert De Forest its murderous 
tenements ; Felix Adler its slavery of the children ; Roose- 
velt its poisonous food products." Mr. Hunter sees all these 
things at once, and the sight has driven him to join those 
who demand "the social ownership of the instruments of 
production." 

Public ownership is an effective means of giving to labor 
good wages and to the user good cheap service. 

It is not the tendency of publicly owned utilities to raise 
rates or cut wages w^ith the advent of prosperity. Advan- 
tages of science, and general progress inure through this 
channel directly to the benefit of all. 

Privately owned concerns charge "what the traffic will 
bear." When invention reduces cost it does not imply a re- 
duced cost to patrons of private service. What a large per- 
centage of the benefit produced by such noble branches of 
government as the geological survey, harbor and river im- 
provement, reclamation service, etc., are absorbed by great 
private monopolies who dominate the approaches thereto! 

The extensive building of highways, now so generally 
agitated, could be made a grand blessing to humanity. If 
15y proper legislation the principal roads, those connecting 
the greater cities, were made into boulevards, it would be 



UNITS. MONOPOLIES, PUBLIC OWNERSHIP 189 

the crowning achievement in relieving congestion. But to 
do this, the land, not alone for a broad street, but from two 
to five hundred feet adjoining, should be acquired by the 
State, and platted into home sites. Then with a publicly 
owned car line, with driveways, cement walks and lawns on 
either side, the grandest residence places on earth would be 
afforded, and could be sold at fair prices to repay the cost. 

Public ownership and operation is pre-eminently scien- 
tific and certain of success with all forms oi service- 
industries which are units, and whose output is not diversi- 
fied and intricate. If intelligently administered, it restores 
to society its natural rent, to consumers their natural prices,'. 
to laborers their natural wages. Its rapid extension is only 
limited by our blindness to our mutual interests which toler- 
ate the crude and barbarous forms of government yet pre- 
vailing in most of our States and municipalities, where 
quantity of legislators takes the place of quality and intel- 
ligence. Is it any wonder that a herd of barkeepers and 
ignoramuses should fail to administer anything success- 
fully? 

The most radical evolution tending to such an improve- 
ment of government as will hasten publicly-furnished utili- 
ties as well as the achievement of other needed reforms is 
the simplified form of government termed the "Commission 
plan of Government." This plan, born of calamity, and the 
courage of less than a score of citizens of real public spirit 
in Galveston, is being inaugurated in various cities. Its suc- 
cess is the result of its common-sense simplicity. A board 
of a small number, preferably three to seven, is appointed by 
the Governor or elected at large in the city, to manage the 
city's affairs as would the directors of a corporation. They 
are adequately paid by the city for their work, instead of 
being paid by bribe-givers. What could be more absurd 
than to elect members of a city's government from wards. 
The interests of the various sections of a city need no dis- 



190 RIGHT AND RICHES 

tinctive representation, and to select legislators so gives the 
meanest citizen with a local ''pull" a sure seat. But why is 
it more intelligent to elect State Legislators so, or to have 
such a great unwieldy herd of them? 

This new, simple form of government recognizes the 
natural unity of the community to be governed. It was the 
perception of vital principles which caused the framers of 
our Federal Constitution to preserve the integrity of the 
States. Each State has certain conditions, certain moral 
and social problems which demand peculiar treatment. Our 
nation is stronger by maintaining the integrity of States. 
Centralization of power in the Federal authority is extreme- 
ly dangerous. Each State is a family and should have a 
separate house to suit itself. But wards, townships, legis- 
lative and congressional districts have no individuality. 

A city is a unit and not a federation of wards, and to 
cut it up into parts for representation is to nullify the ex- 
pression of the public will, by a complicated division of re- 
sponsibility. As well might a railroad select a director from 
each county through which it passes. 

Public ownership is sound in theory and works well in 
practice, but with all its possibilities, no one reform will rec- 
tify the dense errors which centuries of darkness have estab- 
lished. The utilities which at this time appear to be ripe for 
public ownership, effect but a minority of the people. Addi- 
tional measures of reform are needed, the most fundamental 
of which is an aroused public conscience. Corruption and 
graft have grown fat on the unprecedented rise of franchise 
values, but dishonest or ignorant legislators can damage the 
community even more by depriving it of the use of public 
conveniences through refusing franchises and neglecting 
other means to provide them, than by granting franchises 
without proper restrictions. To prevent effective utilities 
by lack of legislation is burying the public's talent. Mod- 
ern conveniences benefit the public, however unjust it may 



UNITS, MONOPOLIES, PUBLIC OWNERSHIP 191 

be to enrich corporations through franchises for them. Un- 
til pubHc ownership and operation is possible, franchises 
should be quickly granted under such terms as will best con- 
serve the public's interest. 

Los Angeles proposes to adopt intelligent measures with 
regard to the sand in her river bed, to which she holds fee 
simple title through an ancient Spanish grant. A daily 
paper says : 

"The scheme of Contractor Doran to hoist sand out of the 
river bed and deliver it to the sand haulers at a stated price per 
load, after being turned down by the city council, will be rec- 
ommended by the mayor as a good one for the city to adopt. 

"The mayor has sent a communication to the council rec- 
ommending that the city purchase hoisting machinery, exclude 
teamsters from the river bed and charge them ten cents per load 
for gravel delivered on the banks. 

"About 1200 loads of gravel are hauled out of the river bed 
every day. The cost of the machinery, he says, would be only 
several hundred dollars. The city would make $100 or more 
per day out of the enterprise, prevent the undermining of bridge 
piers and dispense with the numerous conflicts among quarrel- 
ing teamsters in the river bed. Greatest stress is laid on the 
financial feature, as the city needs the money." 

In the construction of the great Roosevelt Dam, which 
will form an artificial lake covering 25.5 square miles of 
ground, a large quantity of cement was required. The best 
price quoted to the Government for cement delivered was 
nine dollars a barrel. When it was announced that the Gov- 
ernment would construct a local plant of its own to manu- 
facture the cement needed, at the request of manufacturers 
further bids were asked for. The best price then offered 
was $4.98. The Government plant was constructed, and for 
over two years has been producing cement at a cost of about 
two dollars per barrel. The toal cost of the plant was 
$218,380.57. It has already paid for itself and will save on 
this job about a million dollars. The same plan has been 
adopted at the Panama Canal. 



192 RIGHT AND RICHES 

The City of St. Louis is arranging to supply itself with 
lime by kilns in its Workhouse. St. Louis not only uses 
large quantities of lime in public works, but in purifying 
her water supply by a system perfected through the efforts 
of Mr. John A. Wixford, one of the moderate salaried em- 
ployes in the Water Department, a process eminently su- 
perior to any method of filtering both in its results and 
cost. 

Until social conditions advance far enough beyond their 
present status, it will be impossible for the people to under- 
take the collective performance of all functions which now 
require franchises or other private control of natural or 
social opportunities. It is then only a question of what so- 
ciety is now ready to undertake to do collectively. This 
depends on the degree of civic progress in each community. 
As men come to have more benevolence they will begin to 
lose that inverted conception of wealth which rests on hin- 
dering others' use of it, upon the power given by it to com- 
mand others, and they will gain the true idea of its real 
value, which is efficiency to contribute happiness. 




CHAPTER IV. 

TitIvE: and Time. 

HAT is the purpose of giving private title to prop- 
erty? That it may be more effectively used. 
Naturally, then, no title should run for a longer 
period than a lifetime; for why should we extend 
title to the dead? The Chinese and some Indians bury his 
property with the owner. Is it more reasonable to allow its 
disposal by him after his death? 

All ownership should be limited to the lifetime of the 
grantee. This is not an untried theory. Patents are granted 
for only a limited term by every government. So are copy- 
rights. In many countries they are based on the life time of 
the author; in some they extend to the time his youngest 
child attains a certain age. In most States franchises for 
public utilities and corporate charters are only granted for 
a limited term of years. After a great struggle, Illinois has 
finally secured a law limiting franchises to a shorter term of 
years than previously given. 

Why should the title to land be perpetual? 

We grant that he who goes into the wilderness as the 
pioneer deserves credit. But no one can do a service to com- 
pensate all future generations for the loss of their birth- 
right. Has any certain generation the sole right to the 
earth? Has not each child born an equal claim to enjoy 
the bounties of nature ? 

What if William Penn had formed a close corporation 
for his heirs, and held to Pennsylvania, and continued until 
now to collect rent upon all land in the State? 

But why not as well one hold title as for a considerable 
number of men to do so? The Anthracite Coal Trust col- 

193 



194 RIGHT AND RICHES 

lects millions upon millions on a small fraction of the State. 
Shall this be perpetual ? 

While the same principle holds good with Wealth-prop- 
erty — that its title should not extend beyond the lifetime of 
its producer, yet nature enforces the law as to such prop- 
erty. Only an infinitesimal portion of it endures even for 
the fourth of a lifetime. How much wealth is there to-day 
more than ten years old ? Many houses, some roads, scarce- 
ly any railroads — they must nearly all have had new ties 
and rails — no grain, very little furniture or fabrics. In 
forty years almost all such things become memories. 

Hence, in limiting the term of ownership we need but 
look to Concessions and Credits. Here alone we have per- 
manence. Lands which were granted hundreds of years 
ago, are to-day held by descendants, and in many cases 
growing more and more valuable. 

There was litigation in St. Louis to establish ownership 
on account of the alleged possession of the property by an 
ancestor more than two centuries previous. Had evidence 
been sufficient, the claim should have been recognized by 
our courts. Is this not worse than burying property with 
the dead? 

The remedy is very simple. The same remedy was pro- 
posed for freeing the negroes, that all born after the plan 
went into effect should be free. So let us recognize that 
each child is born with an inalienable right to the freedom 
of his pro rata of land and opportunity. 

The termination of title to homes and farms, when they 
are of such small size as to be personal in their nature, need 
not disturb the occupants but simply come about by a con- 
cession tax on the rental value. This could be put into effect 
by gradual increase in the ground tax to somewhere near 
the rental value of the land, excluding improvements. Im- 
provements of a permanent nature, such as drainage, etc., 
might also be considered to merge into the land value after 



TITLE AND TIME 195 

an average lifetime. Railroad grades, tunnels, canals, etc., 
become fixtures. 

Bernard Shaw, in comparing copyright protection with 
land title, brings out the absurdity of the former. He says : 

"Property in land was instituted in order to secure to the 
tiller of the soil the reward of his labor. 

"Property on the land has the effect of entirely preventing 
the tiller of the soil's getting anything out of it. He gives all 
the rest to absolute idlers. 

"We go on in the old way and we do not revise it. 

"It is perfectly evident to me that if we, by some means 
or other, could be thrown into a state of chaos, and if to-mor- 
row we could sit down and work out new institutions, we would 
not dare to institute property in land at the present time. It 
would be the act of madmen. 

"Property in books, however, is a matter of recent insti- 
tution, and we find this property strictly limited. You don't 
say to a man who has written a particular book: 'This book 
shall be yours and your heirs' forever.' What you say, very 
sensibly is, 'We will allow you to have the privilege for forty- 
two years, or, if you live longer, for seven years after your 
death, or rather, whichever period shall be the longest.' 

" 'It is quite useful for Socialists who are engaged in 
propaganda to remind people that in this very important de- 
partment of production, the production of works of art, they 
have actually applied the strictly Socialistic method of settling 
property, that instead of giving a man an unlimited period, 
they give him title for a limited period, and then throw the 
book into the common stock.' 

" 'At the end of that period all these extraordinary works 
of a man will be thrown into the common stock and another 
person may print his books.' " 

The G:eNi:RATioN's Rights. 

I know that inheritance is a sacred institution. It ex- 
isted away back in the days of Abraham. Those in power 
have fostered the idea. Until recently, they fixed the laws 
all over the world so that their children should inherit the 



196 RIGHT AND RICHES 

government. Printing presses and public schools are break- 
ing in on that prerogative. 

But property, the greatest force to compel or govern 
people, is still universally considered a right for people to 
inherit. It is plausible. My boys or girls are the dearest on 
earth. Why should they not have what is mine when I am 
gone? Ah, but how about others' dear sons and daugh- 
ters? They have a birthright, too, whether their ancestors 
were money makers or not. And how do you know that 
what you have now may be kept for your children when you 
are gone? Were it not better to leave less, and to leave a 
better system of society and government for them to live 
under? One that would guarantee them a useful education 
and a broad opportunity? To love those near to us is well, 
but 'Mo not even publicans the same?" 

Are all men born free and equal ? What does this mean ? 
Not that they are equal in stature, or intellect, or talents, but 
equal in rights. Our government is supposed to be based on 
this principle, but does our government carry it out? In 
some matters of sentiment this principle is enacted into law. 
All have the right to trial by jury, all have the right of free 
speech, all have the right to work for a living, if the priv- 
ileged few give them the opportunity. 

If there is to be a race or contest for a prize of equals, 
all start at once on even ground and have an equal 
weight. If there is not equality, some handicap is put on 
the superior ones. A true sportsman would hold an athlete 
of a superior class in contempt who should enter a race with 
inferiors and then try to use some advantage. In the race 
of life do all start equally? How many poor boys strug- 
gling, suffering from hunger, weather, exposure and lack of 
education and equipment can testify to the negative ! How 
many poor girls are growing into v/omanhood without any 
of those things that are requisite for comfort and refine- 



TITLE AND TIME 197 

ment, how many who are even suffering for bread! Robert 
Hunter says: 

"Summed up in a sentence, the chief cause of the prevail- 
ing poverty of the adult poor is the fact that they are handi- 
capped by the effects of a poverty-cursed childhood. As some- 
one has said, 'the destruction of the poor is their poverty.' The 
poor child who survives the appalling slaughter of the inno- 
cents — 307 deaths per thousand — is too frequently marked for 
life by the insufficient food and care which brought his fellow 
sufferers of the poor home to the grave. Here is 'race suicide' 
in its most appalling shape. And inasmuch as most of the 
deaths from disease among the infantile population in poor 
quarters are undoubtedly due to insufficient nourishment, the 
food problem is the most pressing. 'There is at least one 
European municipality which has solved this problem of the 
feeding of school children in a delightful, direct and simple 
way. The city of Vercelli, Italy, has made feeding as compul- 
sory as education. Every child, rich or poor, is compelled to 
attend the school dinner provided by the municipality, just as it 
is compelled to attend the school lessons.' " 

How many babies have not sufficient clothes to prevent 
suffering! How many die from lack of ordinary care and 
good food, through poverty, while others are born with title 
to tracts miles and miles in extent ! Yes, while even dogs 
have thousands squandered on them ! 

I do not plead for equality between the ignorant and the 
learned, between the filthy and the clean, between the boor- 
ish and the refined, in the ordinary social intercourse. I do 
not wish to hold down the man of great capacity to the level 
of him who can only shovel. I only plead for an equal start. 

What more right has the tender babe of a Gould or a 
Carnegie than the child of him who gets but nine dollars a 
week for shoveling? The Carnegie or Henry B. Hyde or 
Krupp deserves more than he who can only push a wheel- 
barrow, but where does one babe derive a greater right than 
another? You say from the right of inheritance, but what 
proof have you that inheritance is right ? That we are used 



198 RIGHT AND RICHES 

to it, and are not shocked by it, is true ; but we should be, 
for it is the monster crime, though not yet recognized. 
A prominent minister recently said : 

"It is rather a hopeful commentary on the decency of 
human nature that the actual abuse of children now excites 
among civilized people the greatest abhorrence and resentment. 
The neglect of children and the sinful iniquities of society of 
which they are constantly the victims do not seem to have made 
an appeal to public sentiment sufficiently strong to have cor- 
rected them. 

"In a hearing at Scranton before the arbitration committee 
appointed to investigate the complaints of the miners, it was 
testified that little girls no older than 11 and 13 years were em- 
ployed at night work in mills, for which they received 65 cents 
for twelve hours labor. 

"Now, let no man or woman who looks into the laughing 
eyes of children who are well clothed and fed and pampered by 
fortune forget that the system which consigns other children to 
toil and privation is desperately wicked. Let them not lay the 
flattering unction to their souls that when they have satisfied 
the wants and gratified the desires of their own darlings they 
have discharged their whole duty. There is not a principle of 
justice in all the universe of God that sanctions the inequalities 
which cause certain children to abound in luxury and others to 
suffer from poverty." 

Can a baby before it crawls give consideration to the 
community for more than its common share? 

If one should be allowed to take what was owned by his 
parents, when they have property, why should he not be 
compelled to pay his parents' debts, if they die bankrupt? 

All would say, ''Oh, he is not responsible for his fath- 
er's failure." Neither is he for his success. ' 

What should be done with estates, should they be dis- 
tributed to the poor? No, not directly. That would be 
too drastic and very likely the poor would be harmed in- 
stead of benefited and the children of the rich, being used to 
luxury, would suffer too greatly. I do not contemplate 
when Mr. Brown dies to go into his home and sell it, to- 



TITLE AND TIME 199 

gether with its library and furnishings, and put his children 
into a public home. 

No, I simply propose to go ahead, along the line on 
which we have started out, and to broaden as we go along. 
We made the great initial step when we established free 
schools. This recognized the common right of the child to 
education. Now some "anarchists" in school managements 
in different cities have recognized the child's right to eat, 
and have arranged to give a good warm meal to those com- 
ing to school hungry. 

"Suffer little children to come unto me, and forbid 
them not, for of such is the Kingdom of Heaven." What a 
narrow construction we put upon the Master's words when 
we are satisfied with simply providing Sunday-schools and 
churches where the child may go if it happens to have any- 
thing to wear, and when we neglect every earthly provision 
for its comfort. No saying of the Master is more obviously 
true than the above. The child thought is receptive of God's 
truth, and the first duty of the Christian is to strive to open 
up to it the gates of this kingdom of harmony not only to 
his own children, but all children; not alone by offering 
them good words, but by striving to see their needs sup- 
plied. 

In many States the child's common right to correction 
and training to keep it out of crime is being recognized, and 
juvenile courts are established. 

Laws are being made and enforced to prevent those un- 
der fourteen from being put to hard labor. They should be 
taught to be useful and happy. They should have pleasant 
surroundings. They need not own them but use them. 

No child should be compelled to liVe in pent-up tene- 
ments. Cities should secure ground for cottages and make 
them available to all children. Private builders should not 
be allowed to build without sanitary and attractive features. 
Bad tenements should be torn down. Baths and gym- 

13- 



300 RIGHT AND RICHES 

nasiums, gardens for them to work in, play grounds to play 
in, laboratories, and machine shops and studios to work in, 
should be available to, and urged upon all children. 

Gov. Folk of Missouri, in speaking of the working of 
the compulsory education law in Missouri, pointed out what 
he declared to be a serious defect in it : 

"This defect," said Gov. Folk, "exists in practically all of 
the States that have compulsory education. The defect is in the 
provision which permits a child, 'the sole support of indigent 
parents," to be relieved from school attendance and allowed to 
labor. 

"Recently, I went through some of the great factories of 
St. Louis to investigate the workings of this law. While the 
child-labor law is enforced, I found many instances of little 
girls and boj^s of 9, 10 and 11 years of age at work. In each 
of these cases it was claimed that the child was the only support 
of a parent. Experience has demonstrated that the majority of 
claims for exemption are not bona fide, and are the product of 
parental advice rather than necessity. 

"However it may be, I believe if a parent is so poor that he 
must depend for support upon the labor of an infant child, he is 
poor enough for the State to support him as a pauper. He 
should not be allowed to destroy the child mentally, physically 
and morally, as is the usual result when children are permitted 
to work in factories at such tender ages. It is far more im- 
portant that the child should be given an education, and be 
made a useful citizen, than that the parent eke out a miserable 
existence through the meager earnings of an infant when the 
parent can as well or better be supported by the State." 

Bernard Shaw says that one of the plainest duties of 
Society is to pension widows. This principle is well recog- 
nized in the institution of alimony. We insist that a man 
who has married a woman, support her until she has by 
some misconduct forfeited that claim. Then, by what sort 
of reasoning can Society shirk this responsibility when the 
man dies leaving her without estate? 

Among their first lessons, children should be taught 
citizenship — their mutual rights, duties and responsibilities. 
They should come early and naturally into the habit of prac- 



TITLE AND TIME 201 

tical organization and collective action so that they may be 
able to assert themselves against professional politicians. 
Progress is rapid in child culture and protection. Burbank, 
inspired master of floriculture, would naturally perceive the 
truth of child culture and affirms environment to be all im- 
portant. Nathan Strauss, noble Hebrew, recognized the 
child's right to pure milk. Many others are looking out to 
provide them fresh air and enjoyment of nature. But from 
where is the money to come to give the dear innocent ones 
the wholesome environment which is their right? That 
brings us to the other side of the question. Why, by the 
most natural reasoning possible, from the excessive estates 
left by the rich to their heirs. 

A small boy inherits the Field millions, including vast 
commercial enterprises where thousands are employed. This 
is a misfortune to the child. There are two weak ends to 
life, as we now live. The child and the aged need care, and 
it must come from those in intermediate life who are strong, 
and able to provide for more than their own personal needs. 

There are two conditions of life conducive to vice and 
crime, excessive wealth and poverty. Why not somewhat 
level these extremes? I believe in inheritance, but it is the 
inheritance by one generation of the progress of previous 
ones ; the inheritance, by the weak and helples.s child, of the 
care and protection of sturdy manhood and womanhood ; the 
inheritance by age of enough for support whether or not 
it has had sufficient acquisitiveness to accumulate and hold 
on to it. 

Elbert Hubbard has said: "So long as men accumulate 
wealth that their children shall not work, and so long as the 
rottenness of gentility shall be unperceived, so long will one 
generation weaken itself by consuming what another has 
created. 

"The use of power to form a Superior Class is the one thing 
that has wrecked the world and made calamity so long of life. 
This Superior Class is always a menace, always a curse. Its 
distinguishing feature is to exclude — it is ossified selfishness. 



202 RIGHT AND RICHES 

"The Superior Class is a burden. No nation ever survived 
it long, none ever can. This volunteer Superior Class has 
always thought that good is to be gained by avoiding labor; 
by wearing costly and peculiar clothing; by being carried in a 
palanquin, by being waited on by servants; by eating and drink- 
ing at midnight; by attaining a culture beyond the reach of 
most; by owning things that only a few can enjoy — these are 
the ambitions of the self-appointed Superior Class. 

"The Superior Class lives by its wits, or on the surplus 
earned by slaves or men that are dead. When you live on the 
labor of dead men you are dead yourself. It can never be done 
away with through violence and revolution. This has been 
tried again and again. Revolution is a surgical operation that 
always leaves the roots of the cancer untouched. Another 
excrescence sprouts, and one Superior Class is exchanged for 
another. 

"No, the desired end can never come through threat and 
violence — that is where men have stumbled since history be- 
gan. The millennium will come in this way, men will re- 
fuse to enlist as soldiers for any other reason than to protect 
a threatened invasion of their homes. 

"There is no health in idleness, there is no joy in selfishness. 
The Superior Class is simply a huge mistake — it is to be pitied, 
not envied, and when our children and our children's children 
know this, and are willing to do unto others as they would be 
done by, one generation will then conserve and hold the good 
that another has gained." 

Here is a clear recognition of the important truth so sel- 
dom recognized, that the enslavement of the masses comes 
not from some persons in the oppressing class, but from the 
innate selfishness and lack of love among the masses. To 
destroy the aristocrats never brought freedom. As St. Paul 
states it : "For we wrestle not against flesh and blood but 
* * * against the rulers of darkness of this world." 

What is the community's interest in great estates? They 
are accumulated (if legally) through the growth of the 
community in population, wealth or intelligence; perhaps 
partially through some bright ideas or inventions of their 
builders. But bright ideas, in a measure, belong to the pub- 



TITLE AND TIME 203 

lie. They are the outgrowth of our civilization. The men 
who give us the greatest thoughts seldom receive much 
compensation in property. Hence such ideas, when their 
originators have been duly compensated, naturally revert to 
the public. 

But it may be asked, if the unearned increment of land 
and franchises are restored to Society through taxation upon 
an assessment based solely upon those elements of property 
value, what then is there left to descend from one generation 
to another? 

While assessment may be entirely limited to the conces- 
sion element of property, yet it will always be impossible to 
take the whole of concession value through taxation. 

But aside from all such interest, there is another kind of 
property of almost equal extent, which is handed down from 
generation to generation. This is the great volume of 
Credit. In the chapter on Credit I try to analyze this form 
of property. It arises from a legitimate source, but after 
the lapse of years grows to be a veritable vampire on in- 
dustry. The Rothschild estate, whose origin was the price 
of graft and crime of the most diabolical order, has lived and 
grown fat on extortion and corruption, generation after gen- 
eration, and still goes on sucking the life blood of many na- 
tions. 

Credit as a means of exchange is a useful servant of 
civilization, but its fruit belongs only to him who has earned 
it by abstention. 

Credit which represents the value of goods actually be- 
stowed upon the debtor, is in practical effect a latent title 
in such capital and entitled to its share of its fruitage. 

How much credit is but the awful incubus of debt to 
those who owe, for which they slave from generation to 
generation! Millions, billions of debt is saddled upon the 
producing class by manipulation of legal tender, and 
through stock jobbing and real estate speculation. 



204 RIGHT AND RICHES 

The Israelites recognized in a crude way this debt- 
slavery, and tried to remedy it through their Jubilee Year 
law which canceled debt. But such laws cannot distinguish 
between the true credit and the false. 

There is no way apparent except to liquidate it in some 
measure at the death of the holder through inheritance tax. 
Many States have a measure of taxation on estates. Men 
of the greatest business ability endorse it. 

The unequivocal declaration of three of America's fore- 
most financiers and men of affairs in favor of a liberal in- 
heritance tax was the salient feature in the recent delibera- 
tions of the Civic Federation. 

Andrew Carnegie and August Belmont strongly advo- 
cated the inheritance tax and so did Melville E. Ingalls. 

An income tax, Mr. Carnegie said, "was impossible," 
but he believed with Mr. Gladstone, "that it made a nation 
of liars." 

As to a graduated inheritance tax, Mr. Carnegie said he 
advocated that "as the best means of getting something like 
a better distribution of wealth than we can by any other 
means." 

"The growth of the American public," Mr. Carnegie 
continued, "that is, the basis of great estates — the public — 
is the partner in every enterprise where money is made hon- 
orably. I say the community fails in its duty, and our legis- 
lators fail in their duty, if they do not exact a tremendous 
share, a progressive share — no idea of ever making his 
children paupers, no idea of interfering with his right to 
leave them a competence — of those millions which would 
really have a different name from property. 

"My experience is that I would as soon leave a curse to 
my boy as the almighty dollar. There are exceptions every 
now and then, but we must legislate not for exceptions; we 
must legislate for the general good." 



TITLE AND TIME 205 

To tax gifts and inheritances is right. It is not burden- 
some. It is simple in collection. We bring nothing into the 
Vv^orld when we come and should take nothing out. Larger 
fortunes should pay a greater percentage. Indirect heirs 
should be cut off entirely except by will, so should bequests 
to religion. 

This seems to be a proper form of revenue for Federal 
purposes, to replace in some measure the iniquitous tariff. 
But it might be advisable that it should be applied to specific 
purposes. 

The most appropriate use possible is for old age pen- 
sions. 

Certain forms of property only might be taxed for this 
purpose — inherited bonds, corporation stocks, mortgages 
and all inherited evidence of debt seem advisable for national 
taxes. Real estate and personal property inherited might 
be left to be taxed locally. 

Old age pensions are of the plainest and most positive 
necessities of civilization. 

Why should the soldier of war get a pension and the 
soldier of peace get none? The most useful citizens often 
have the least acquisitiveness. What is more pitiful than 
a white-haired man or woman, after a lifetime in useful 
work — perhaps in raising a family — helpless and without 
support? He may have earned vast fortunes of wealth of 
which all got a benefit, and yet, either through mistaken 
liberality or lack of good management, arrives at old age 
penniless. The wants of the old are not many; they should 
be supplied. Not as a gift, but as something due them. 
This is done in New Zealand. This means of restoring to 
society its own is eminently scientific. No other remedy can 
take its place. As intelligence increases it will be demanded. 

How little it would cost for each county to procure a 
tract of rolling farm land and subdivide it into lots of half 
an acre or so and erect on each a small, plain, cozy cottage 



206 RIGHT AND RICHES 

of two or three rooms. Each poor old person in the county 
could be furnished one of these as their own home for the 
balance of their lives. The land would, with their own light 
labor, half support them. The county could furnish such 
further assistance as was needed. Meeting places and clubs 
should be furnished to make their hours more pleasant. The 
average Poorhouse is one of the saddest failures known. A 
fraction of burdensome inheritances would supply the ut- 
most needs of childhood and age. 




CHAPTER V. 

Taxation and Compe^nsation. 

jHAT is Government f It is not a person, society or 
corporation. In a monarchy it is the king and 
royalty. In a true democracy it is simply the agent 
of society. But there is no existing example of 
true democracy. Various countries with Republican form 
of government are approaching nearer to a true democracy 
than ever before in history. But it matters not in its effects 
whether the will of the people is thwarted by an heredi- 
tary royalty, or by some other power, which dictates to and 
controls the people's agent. 

Wherever the people's agent is controlled by another 
power than the people, the funds placed at its disposal by 
taxation are largely used for the benefit of this controlling 
force. 

In a monarchy it is diverted to the use of a royal fam- 
ily and its multitude of relations. In a republic it may be 
diverted to the use of the owners of privilege. 

A truly democratic republic is a corporation in which 
each citizen holds one share of stock, no more, no less. We 
should each and everyone vote that share, and insist on a 
large dividend. 

There should be no assessment ever needed on this stock. 
Society has such rich resources, which, should its agents hon- 
estly lease or otherwise collect an equitable revenue from 
them, would pay for many times the benefits that govern- 
ment now affords us. 

Government is society's Trustee. The property in the 
hands of Society's agent is intended only to be used for such 
purposes as benefit all people. We often hear the expression 

207 



308 RIGHT AND RICHES 

"taxes for the support of government." This expression 
betrays an ignorance of the true purpose of government. 
One would not say that the dues he paid to his lodge, his 
church, or the premiums he paid to his mutual insurance so- 
ciety, were intended by him for the support of its agents. 
Another expression of the same persons is "the protection 
given taxpayers by government." 

Protection to what ? Against what ? Protection against 
bandits or pirates? Truly government does give this pro- 
tection, but it takes such a minor part of its revenues that 
it is foolish to consider such protection as being any consid- 
erable part of the purpose of taxation. 

If it is meant the protection of certain interests in their 
system of extortion, we may consider that taxation to them 
is indeed compensated by "protection." 

But what compensation should the taxpayer get under 
an honest system of government? He should get a direct 
commercial advantage for every dollar he pays. To para- 
phrase the old sentimental, though reasonless. Revolution- 
ary battle-cry, we want "no taxation without compensa- 
tion." "No taxation without compensation" implies the 
correlative proposition, "compensation to society for all con- 
cessions and privileges." This compensation which is due' 
to society in return for the natural and social opportunities 
conferred upon private persons and concerns, would supply 
a plenteous fund of revenue. The Saturday Evening Post 
says: 

"The assessed value of land alone, exclusive of improve- 
ments, in the City of New York is greater than the assessed 
value of all the real estate, improvements included, in the State 
of Pennsylvania, and nearly twice as great as the value of all 
the real estate, improvements included, in the State of New 
York outside of the city. The assessed valuation of land for six 
square miles of Manhattan in the neighborhood of Central Park 
is greater than the assessed value of all the real estate in the 
State of Missouri. 



TAXATION AND COMPENSATION 209 

"So says the president of the New York City tax board in 
his latest report; and we earnestly commend the statement to 
the consideration of all those persons whether official or lay, 
who are studying the troublesome subject of taxation. 

"The City of New York created every dollar of that enor- 
mous value. And, while the city is creating this vast wealth 
for individuals, it is anxiously seeking money to pay its running 
expenses. Try to imagine a man who produces a million dol- 
lars a week and has to borrow money to buy flour and bacon. 

"Various expedients to recover for the people who actually 
make it, some share of this immense increment have been sug- 
gested, and even tentatively practiced, as in levying a graduated 
percentage tax upon the increase in value between each 
recorded transfer. In nearly every American city, tax experts 
toil over schemes — mostly impracticable — to uncover tax-dodg- 
ing personal property or get a few thousand more out of dog 
licenses, and will not look at this gold mine of realty in- 
crement." 

What a farce are most of the present means of taxation ! 
Even the most common theory of taxation, if applied in any 
business but that of government, would be resisted as pure 
robbery. 

This accepted precept is that each shall pay taxes accord- 
ing to the value of the property owned by him. 

Suppose one had his bill at the hotel rendered on this 
basis ; suppose the grocer, tailor, street car line, the gas com- 
pany, the coal merchant, charged on this basis. How ab- 
surd ! What ridiculous consequences ! 

Why should one pay taxes on the value of his diamonds, 
stocks, merchandise, live stock, because he lives within the 
geographical limits of a city, State or other taxing com- 
munity? Intelligent taxation is a debt for value received. 
How can one cancel such debt to one community and incur 
a like one to another community by moving his bed across 
a boundary line? 

Many laws are passed by State legislatures purporting 
to encourage the growing of fine stock. Yet whenever 
stock of great value is brought into the State, the owner 



210 RIGHT AND RICHES 

must pay a tax penalty. A recent press notice gloated over 
the fact that a fine collection of art had been caught by a 
new form of assessment. Millionaires, and people of even 
less wealth, are driven out of cities, where the rate is high, 
to villages where it is less, by such robbery laws. 

The history of taxation would be the basis for the great- 
est of farce comedies, if it were not of such sad conse- 
quences. There have been taxes on cats, dogs, birds. 

Most street railway franchises have a license tax on cars, 
of $35.00 or so. Do strap-hangers ever consider how many 
cars this may keep out of use? 

Taxes on wheeled vehicles have caused great districts 
to depend on sleds for means of conveyance. Taxes on salt 
have caused people to become diseased for want of it. Taxes 
on windows have built thousands of homes with solid walls 
except for doors. This is indeed a consistent result of 
ignorant taxation — to wish to shut out all light. One of 
the most extensive as well as pernicious bases of taxation 
is that on exchange. Think of striking at the very roots of 
business with taxation. 

The "Iron Duke" paralyzed the trade of the prosperous 
Netherlands by such a tax. Customs houses are monuments 
to this most abominable form of taxation. Tariff taxation 
hinders trade, robs the producers of one country and the 
consumers of another. It is so uncertain in its results that 
it breeds public extravagance, even while it is producing 
panic by piling a great surplus in the treasury. Big bank- 
ers fatten on this through free use of such surplus. There 
is no known certain means of reducing or increasing the 
amount of revenue under a tariff tax. Lowering the rate 
often increases the revenue, and raising it often lowers it. 
No one can approximately predict the amount of revenue. 
A tariff tax, like most unjust taxation, fosters artificial lines 
of industry. (Thomas G. Shearman, in his Natural Taxa- 
tion, has very logically dissected tax systems. His work 



TAXATION AND COMPENSATION 211 

should be read by every member of a legislative body from 
United States Congress to district school board.) 

It is v^ell recognized that if railroads allow some patrons 
free or reduced rates they must overcharge others. If this 
is true of a private corporation, hov\r much more so must it 
be true of government. If government gives its resources 
free to some, it is compelled to rob others. 

The usual manner of enforcing payment is often as fool- 
ish as the basis of tax assessment. In many States property 
is sold for taxes, but the buyer is given no title, while the 
poor owner is deprived of his. In some States a discount 
is allowed for payment previous to a certain day and a pen- 
alty is exacted after such day. But in most States there is 
no such reasonable provision. Millions of dollars are forced 
from the people's pockets into the hands of treasurers, to be 
kept by the bankers who back them, free of interest. 

John F. Smulski, elected treasurer of Illinois, deserves 
great praise for refusing to qualify until a law was passed 
permitting him to loan out the State funds with interest pay- 
able to the State. He also insisted that the State should pay 
the surety company bond premiums to keep the treasurer 
free from bank domination. 

But why should Illinois have from five to eight million 
dollars at a time in her treasury? Why not distribute its 
collection throughout the twelve months of the year? 

That taxes are neither philanthropy nor charity is tersely 
stated in the following editorial from the Saturday Evening 
Post entitled "The Important Taxpayer" : 

"Somebody has discovered, in a flourishing inland city, that 
the school board, which disburses a great deal of public money, 
has no member who owns much property and pays taxes to a 
considerable amount. Opponents of the administration, there- 
fore, are making what capital they can out of the ancient and 
naive theory that taxpayers have a proprietary interest in the 
government. One observes, however, that they are not suc- 
ceeding as well as they might reasonably have expected to do 



212 RIGHT AND RICHES 

a dozen years ago, when the statement, that taxpayers were 
opposed to a certain measure, was regarded as a crushing 
argument, and "wasting taxpayers' money" was a damning 
charge against any administration. 

"Of course, no administration does or ever did waste tax- 
payers' money — for the simple reason that, the moment the 
taxes are paid, the money ceases to be taxpayers' money and 
becomes the government's money. What the government does 
with it is no more the business of the taxpayer than of any 
other citizen. Small taxpayers have the modesty to acknowl- 
edge this self-evident truth. But if a man pays a considerable 
amount in taxes it is often nearly impossible to wean him from 
the gross and palpable fallacy that he is entitled to especial 
consideration on the part of the government." 

The same theory is held in many churches regarding 
large contributors. Such contributors give sums of money 
"to the Lord" and then count themselves controlling stock- 
holders in His church. 

Continuing, the Post says: 

"Any one who thinks that taxes are a voluntary contribu- 
tion should attend a session of the board of assessors for his 
locality. In many cities, saloons pay more taxes than any 
other interest, but are not given proportionate representation 
on school boards and park commissions. 

"We wish speakers and writers on political subjects would 
drop the bad habit of talking about large taxpayers as though 
they were entitled to higher regard than other citizens." 

The owner of lots should pay the full cost of paving the 
street in front of them. He gets compensation in increased 
value. But he should not therefore have his general taxes 
increased. This is like the story of the landlord raising the 
rent because the tenant fixed the roof. 

License taxes are a crime. The first thing tax reformers 
should strive for is, that pending the abolition of taxes on 
production, all taxes on land or franchises should be as- 
sessed separately from any improvements, and the taxes at 
payment be receipted separately. This would bring the 



TAXATION AND COMPENSATION 213 

matter to people's understanding. It would have another 
excellent effect. It would promote a more equal assessment. 
Lot 10 of a block assessed without improvements might 
look very strange assessed for double that of 9 or 11. 

It is often more easy to pay the taxes in a community 
where they are high than in another where they are low. 
Taxes are an investment and should pay higher dividends 
than any other investment if properly assessed and expended. 
Government investments should constantly but carefully in- 
crease. They can often be made very profitable. The 
profits of good sewers, parks, schools, clean streets and such 
things are immense. 

The object of government is happiness of the people, all 
the people, not a favored few. Each child should have the 
care which childhood needs, should have education, enter- 
tainment and music. Each adult should have a chance to 
earn a comfortable subsistence with some degree of luxury. 

None should acquire private title to anything more than 
what is the "natural reward" for production. All else be- 
longs to public and is an ample fund of taxes. In "The 
World To-day," Sir Henry Campbell-Bannerman says : 

"It may accurately be said that there is practically but one 
great impediment in the way of a sweeping improvement which 
would elevate the physical and moral welfare of the people. 
This is the interest, and the overdue regard to the interest, of 
the landowner, and the political and social influence that he and 
his class can exercise. 

"Let the value of land be assessed independently of the 
buildings upon it, and upon such valuation let contributions be 
made to those public services which create the value. What is 
our rating system? It is a tax upon industry and labor, upon 
enterprise, upon improvements; it is a tax which is the direct 
cause of much of the suffering and overcrowding in the towns." 

The wretchedness of the city slum is partly the result 
of the present system of tax robbery. The slum tenant is 
taxed on nearly all he eats and wears and then pays the high 



214 RIGHT AND RICHES 

price which natural Hmitations of space near the center de- 
mands. But he does not pay this to society, whose it rightly 
is, but to his landlord. Each addition to population makes 
the value of land greater. What makes this value the fol- 
lowing paragraph from the St. Louis Post-Dispatch, en- 
titled "The Money Value of Men," indicates: 

"With immigration from Europe now on the million-a- 
year basis, Prescott F. Hall has published a volume intend- 
ed to show its advantages and disadvantages to the country. 
In dealing with its advantages, he estimates each immigrant 
as worth at least a thousand dollars, so that a single year's 
arrivals from Europe are supposed to add a thousand mil- 
lion dollars to the wealth of the country. One statement 
offered in support of this view is that it 'costs a thousand 
dollars to rear a child to the age of 14.' While this does 
not seem to be necessarily or even generally true, it is prob- 
able that the average Value' of any man who can consume 
enough to live on and pay for it by his own work, is placed 
low at a thousand dollars." 

To whom are these immigrants worth $1,000 each? To 
owners of concessions, of course. The immigrants go to 
make the slums more crowded, hence to make rents and 
franchises more valuable. But I doubt if the city slum 
is more cheerless than doleful poverty in the country 
on land near or beyond "the marginal limit" of cultivation 
(that is so poor or far from civilization no one wants it), or 
on better farms giving all the cream of their crops for rent. 

People do not leave farms without cause. Nor do they 
go to the big city without some shadow of reason. Edward 
Everett Hale says : 

"It is easy to make faces as we meet the young country- 
man with his wife when they come from Podunk to New York 
and to ask them what they have come for; but it is foolish to 
suppose that the congestion of cities results from their in- 
experience or ignorance. There are some important people who 
are working with them in this matter of crowding the towns. 



TAXATION AND COMPENSATION 215 

First of all, there is the large real estate interests in every city. 
It needs no organization; it is an organization already. The 
man whose grandmother owned an orchard of old apple trees 
in the heart of Boston or New York is glad that his grandmother 
owned that orchard. He is glad that he owns the square feet 
or square inches of that orchard to-day. He knows as well as 
I know that those square inches are worth a great deal more 
in money than they were worth a hundred years ago. Now 
that man does not mean to diminish the current of population 
which falls into Boston or New York. He means to keep up the 
price of real estate in those cities if he can. And when you 
address him a civil note, asking him if he will not attend a 
meeting of gentlemen who wish to promote emigration to 
Idaho, it is almost certain that that man will have another en- 
gagement. 

"Again, it is to be observed that great cities have of neces- 
sity their own spokesmen — shall one say their own drummers? — 
at work for them even unconsciously. Every issue of any news- 
paper of the week-day or a Sunday has its announcements of 
the attractions of a great city." 

This real estate interest crowds every industry possible 
into the city and close to the center. 

Why do the newspapers drum for this interest, and in 
some cases, particularly in the newer cities, fill the people 
with shameful lies? Because this interest does lots of ad- 
vertising. Why the need to go thirty stories above ground 
in New York and six under, when in an afternoon's auto 
ride one can go to the haunts of wild bear and turkeys ? 

This land interest knowingly and intentionally takes the 
people's earnings. Unintentionally they lure them into 
places of the greatest hardship. 

The time is ripe for a society to expose fake booms and 
to discourage the congestion in city centers. This may be 
done by taxing these congested centers; by regulating the 
running of cars so they will not all reach one certain street 
crossing, but a number some distance apart; by creating a 
central zone where factories may not be operated, or if oper- 
ated, put a heavy license tax on them. Limit the height of 

14— 



316 RIGHT AND RICHES 

buildings. It does no good to improve transportation if the 
number of people going to one center correspondingly in- 
creases. Scatter employment and you will scatter employes. 

Concession taxation, that is limiting current levies of 
taxes to those values which are naturally the property of the 
community, is but reclaiming what is the community's own. 
It will take the burden from wealth, from capital, from in- 
dustry. It will restore to the providers of capital what is 
now being taken wrongly by government. It will discour- 
age holding of concessions for the purpose of prechiding 
their use, hence will partially restore to producers their 
Natural Reward, to capital its rightful increase, and to labor 
its just wage. 

Such taxation would be but the compensation, or 
recompense, due to society from the payer. Society has no 
more just right than any other corporation or organization 
to forcibly take from anyone, without having some rational 
basis of claim; without having previously contributed to 
such individual an equivalent. 

The simple fact of the extent of one's riches is no indica- 
tion whatever of the extent of society's dues from him. 

Australasia is far in advance of America in its manner 
of arriving at just assessment values. One of their simple 
provisions is to make the land liable to public purchase at 
a certain per cent, above its assessment for taxes. 




CHAPTER VI. 

QUANTITIVI: TlTLl^ Rj:STRICTION. 

RESIDENT ROOSEVELT, among others, has 
pointed out the dangers to society from unHmited 
holdings of property by an individual or corpora- 
tion. What is the reasonable quantity which one 
may hold? This is hard to establish, but scarcely more so 
than to assess the just value of property for taxation. 

Let us start out gradually as Australia has done. Break 
up the most extensive estates. What has been the curse of 
Ireland, or California? Each are blessed with a climate fit 
for Paradise, and soil of surprising wealth ; especially Cali- 
fornia, such diversity in all things does she possess. The 
highest mountain in the States, in the same county with 
land 600 feet below sea-level, vast stores of valuable min- 
erals, some almost unknown elsewhere; trees compared with 
which all others are shrubs. But as Ireland is cursed by 
English landlords, California is cursed by Spanish land 
grants, now owned by all nationalities. 

One old Spaniard was recently offered $750,000 for one 
grant of a thousand acres which perhaps does not now, for 
want of care, produce a hundred dollars worth per year. 
Yet he plays dog in the manger and asks a million which, if 
offered, he should perhaps refuse. There are hundreds of 
tracts the same; some tens of thousands of acres in extent. 
Vast tracts have been acquired in many States by lumber 
companies. 

"The chairman of the board of directors of the United States 
Steel Corporation, says the Review of Reviews, is virtually the 
ruler of an empire owning more land than Massachusetts, New 
Hampshire,^ and Vermont combined; supporting more people 
than inhabit Nebraska; employing more men than fought at 

217 



218 RIGHT AND RICHES 

Gettysburg; sailing a larger navy than that of Italy; making 
more steel than Germany; gathering in a larger revenue than the 
United States, and representing more capital than all the banks 
in the city of New York. 

Has a man a right to own all he can get? The question 
of unreasonable fortunes is a vital one to government. They 
give extraordinary power. Power is government. Conflict 
arises between the private power and the constituted author- 
ity which results in the triumph of the private power if not 
patriotically checked. 

Frederick Upham Adams in The Cosmopolitan, says : 

"A marked tendency has already developed on the part of 
our "leisure class," resulting in the purchase of vast tracts of 
land which are withdrawn from settlement, agriculture or 
lumbering, and which are set aside for game preserves. Thou- 
sands of square miles of the Adirondacks are already thus re- 
served. This segregation of valuable tracts of land by the 
nobility and aristocracy is one of the curses which afflict Ger- 
many, Austria, Russia and even Great Britain. The idle heir of 
a billionaire could, if he chose, purchase such States as Idaho, 
Nevada, Arizona, or New Mexico, and convert one or all of 
them into private pleasure grounds. 

"There would be nothing inherently vicious in such a pro- 
ceeding. He could "get rid of his money" by hiring an army 
of men to prepare golf courses a thousand miles in extent; he 
could boulevard the Rocky Mountains for the exclusive use of 
his automobiles and for those of his friends, and he could do 
with it as one does with any other piece of private property. 

"The total assessed valuation of the States of Idaho, Ari- 
zona, Nevada and New Mexico, according to the latest statis- 
tics available, is $184,379,167, and the beautiful State of Idaho 
is listed at a trifle more than fifty millions. Such an invest- 
ment would not bother the sportive heir of a billionaire. For 
less than one-quarter of his patrimony he could purchase, and 
have the sole use of, one-seventh of the area of the United 
States, subject only to the exactions of the federal and common 
law. 

Should he be permitted to do this? It will not avail the 
individualist to plead that no person will be so foolish as to at- 
tempt such a step. If a man can purchase a range of mountains 



QUANTITIVE TITLE RESTRICTION 319 

and use them to look at or hunt in, who shall prevent him from 
adding the adjoining counties to his playground? The in- 
dividualist must answer in the affirmative. Can he hold a 
quarter of a State, half a State, all of a State or several States? 
The individualist must affirm that there can be no limit set to 
his holdings. If he makes any other answer the whole fab- 
ric of his theory falls to the ground. 

"The moment a man declares his belief that the govern- 
ment should have the power to limit the accumulation of wealth, 
or to interfere with its investment or expenditure, that moment 
he has arrayed himself against the "freedom of contract," and 
has joined the ranks of those who demand radical changes in 
institutions which have existed for centuries. If an individual 
has the right to own or control the great transportation lines 
which connect the Atlantic with the Pacific, why do you chal- 
lenge his right to purchase the thinly populated empire con- 
tained in such States as Idaho, Arizona, Nevada and New 
Mexico? As an individualist you assert that the national 
government has no right to interfere with the private manage- 
ment of two hundred thousand miles of railway; what concern 
is it of yours what our young billionaire does with four hun- 
dred and twenty thousand square miles of territory admirably 
adapted for a hunting and fishing preserve? How are you to 
prevent him from buying it; how are you to regulate his use of 
it; how are you to take it from him?" 

The most obvious remedies for too great an accumulation 
of wealth in one person are the appHcation of the State's 
right of Eminent Domain and a graduated tax after so much 
is acquired. It should at least seem no hardship to expect 
the great magnates of property to pay a higher percentage 
than others. We might compensate for such increase of tax 
rate on the very ricli by remitting all tax to the very poor 
owners of very humble homes. We might begin by limit- 
ing the quantity of land any person might own as is pro- 
posed in Oklahoma. Alien ownership of land in Oklahoma 
is prohibited, excessive land ownership by Oklahomans dis- 
couraged, and charters to land companies are to be denied 
under the terms of a proposed constitutional proposition. 
After denying to non-residents the right to own land in 



220 RIGHT AND RICHES 

Oklahoma, the proposition requires the Legislature to pro- 
vide that those who may inherit land in Oklahoma shall re- 
linquish title within a reasonable time. Corporations desir- 
ing to buy, sell or speculate in lands, or act as the agents for 
other corporations or persons, shall be denied a charter un- 
der the terms of the provision. 

Extensive ownership of lands by Americans is discour- 
aged by sections of the proposition, which provides for the 
levying of additional taxes on persons having land above a 
certain amount. Those persons having more than 2,000 
'acres will be required to pay the following additional tax 
in excess : Above 2,000 acres, 2 per cent. ; above 3,000 acres, 
5 per cent. ; above 10,000 acres, 25 per cent. ; above 20,000 
acres, 50 per cent., and above 30,000 acres, 100 per cent. 

Another section of the proposition provides that banks 
and loan companies acquiring land by foreclosure of mort- 
gages shall be exempt from this excess taxation for a period 
not to exceed five years after the foreclosure. The legisla- 
ture is authorized to provide for a graduated tax upon per- 
sons leasing more than 2,000 acres of land. 

It is proposed to have Kansas compel the owners of land 
in excess of the amount necessary for a livelihood to pay 
an additional tax or license. Edwin Taylor, who owns 
more than 1,000 acres of the richest land in Kansas, is the 
father of the proposed legislation. Mr. Taylor says he has 
more land than he is entitled to; that he is a land monopo- 
list, and that he is willing to divide his property with smaller 
holders or pay an additional tax. Mr. Taylor is one of the 
advanced thinkers of the State, besides being one of the 
State's wealthiest men. 

In a speech on the subject before the meeting of the State 
Horticultural Society, he said: 

"There may be a discrepancy between my practice and 
my precept concerning land. I say in explanation that I 
have played the land game according to the rules in force. 



QUANTITIVE TITLE RESTRICTION 221 

but I believe these rules to be unjust and unwise. For my 
part, I believe in one wife and one farm for one man, and I 
would have the laws so changed that Mormonism in either 
would be impossible. 

"Monopoly is one of the words with which the American 
public is impatient, and the meanest monopoly of all is the 
monopoly of land, outside of the requirements of a home and 
a livelihood. It is a monopoly that will not always last. We 
can choose between its gradual extinction and its going out 
in strife and distress. If you are disposed to laugh at my 
dismal prophecy, bear in mind that both the North and the 
South either laughed or reviled at the earlier abolitionists. 
I draw no parallel betwen the situations; I merely say that 
a wrong thing is not a safe thing, and that land monopoly 
beyond the reasonable limits of a homestead or the basis of 
a livelihood, whether measured by the golden rule or the 
good of the State, is wrong." 

Land is the most important but not the only monopoly. 
Patents, copyrights, and some other forms of property might 
well be restricted. 

The power given by copyright or patent need not be 
unlimited. It need not require a very intricate law to com- 
pel the holder to produce his works at reasonable prices. 
Their property in such things might be limited to a certain 
percentage on their selling price as customs are collected ad 
valorem. Anyone might then produce such things by pay- 
ing this royalty. But until the grosser evils of land laws and 
franchises are remedied we need not worry with copyright 
and patent laws. 

There is no reason why unwieldy estates should not be 
broken up and recovered to society to be equitably diffused 
among its members, and the most rational way to begin is 
with graduated taxation; equally as effective, however, is 



322 RIGHT AND RICHES 

the assertion of the State's right of Eminent Domain as 
Australasian countries have done. 

5|x ^ 3^ ^ 

The foregoing means of reclamation are consistent with 
the basic scientific principles of right. They admit of be- 
ing practically put into effect, therefore every lover of hu- 
manity should inform himself about them and work for their 
adoption. 

I appeal to you, communistic socialists, to be reasonable, 
for you cannot have a tree before you have a bush. If ever 
you attain your ideal it must be brought about gradually. 

I appeal to you individualists, you who believe in Abso- 
lutism in title, I warn you against the rising discontent. If 
you do not consent to justice by means legal and orderly, 
take care lest this discontent, driven to desperation, break 
forth in anarchy. For men more easily learn the injustice 
from which they suffer than they do the remedy therefor. 



PART SIX 



Finance. 



Chapte:r I. Vai^ue-Poise). 

11. Money. 

" III. Credit. 

" IV. Banks and Panics. 

" V. The Importance o^ Industriai, Corpora- 
tions. 




CHAPTER I. 

VaIvUE^-Poise:. 

|N the chapter on "Value" the distinction between 
"Exchange-Value" and "Utility" and "Lack- 
Value" are set out. In considering exchange- 
value, market, or money-prices, we must take care 
not to try to measure it by human endurance, for it is this 
that makes so much jumble of the subject. 

Is it not obvious that as the sum of wealth, the volume 
of commodities and conveniences increase, that the endur- 
ance, toil, suffering, or labor-cost, constantly grows less 
and less? 

As hours of labor are shortened and conditions of labor 
made more tolerable, the output per worker increases in 
proportion. This is especially so when we take the sum of 
output to humanity as a whole, and not simply the returns 
to laborers ; for the number who have leisure is rapidly in- 
creasing. 

Exchange- value is purely a comparison of market prices ; 
not a comparison of either the utility, the cost in labor or 
the privation it would cause for one to be compelled to do 
without the various things. 

This exchange value of things is subject to very simple 
laws, loosely expressed as the "laws of supply and de- 
mand." More exactly stated, these laws are as follows: 

Such supply of things consists only of the available sup- 
ply — "what is on the market," "for sale" in a competitive 
way. A suppressed store or deposit of natural or made 
wealth is not part of the supply. This refers more, how- 
ever, to unproduced wealth, as produced wealth is seldom 
suppressed in large quantities. 

225 



226 RIGHT AND RICHES 

Stocks of wheat, cotton, etc., stored in warehouses to 
''bull" the market, are Hkely to affect the market the same 
as though offered for sale, where there is fear that they may 
be suddenly offered. But unmined ore, unplowed fields, etc., 
do not compete. 

Only that demand affects the market which is backed by 
purchasing power; which is seeking exchange. Suppose 
you were located on an isolated island and had a thousand 
tons of sugar. What would be its value to you ? Obviously 
what the inhabitants would and could give you in exchange 
for it, which might be limited to a few very crude articles 
of food, furs, etc. But could you teach these natives how 
to fabricate the innumerable commodities of civilization, 
you would thereby increase their means of buying your 
sugar and in that degree increase its value. At the same 
time you would likewise increase the value of their own 
original staple products by enabling the natives to buy them 
with such newly evolved wealth. The starving peasant 
with nothing to offer for bread does not constitute demand 
for bread. 

Demand is only made effective by having other forms of 
wealth with which to buy. Desire for things in general is 
unlimited. Hence, the demand for those things which satisfy 
a certain desire, is dependent on the total supply of all other 
things being offered for such satisfaction. But desire is 
relative as to various commodities. 

With unlimited quantities of free supplies, there would 
be only a minute quantity of some things used, while im- 
mense quantities of others would be taken. Hundreds of 
times as much flour would be used as pepper; many times 
as much cotton as silk. Such we may term the Natural De- 
mand. In proportion as people are able to supply this nat- 
ural demand there is Effective Demand. Natural Demand 
may increase or decrease with change of conditions of life 
and industry. 



VALUE-POISE 227 

The value of the sum total of all wealth may be repre- 
sented by a circle which always has 360 degrees, no more, no 
less, though the volume of wealth multiply. The com- 
modity or group of commodities which satisfies a certain 
desire, as for food, fuel, or money, comprises a segment of 
so many degrees, minutes or seconds of this circle of supply. 

Natural Demand likewise is like a circle, the various 
needs constituting segments of so many degrees. We might 
estimate the Natural Demand for food at present as 45° or 
one-eighth of the total circle of demand. It was formerly 
much more. 

The balance or poise of value resulting from supply and 
demand may be illustrated by a compound scale as shown 
on page 229. The upper arm is scaled from to 100. On 
this arm moves the weight C which stands for the given 
commodity under the consideration as, for example, steel or 
window glass, or cement. The lower arm has a hinged 
bearing at one end, E. The other end is suspended from the 
end of the upper arm. Upon this lower arm moves the 
weight B which stands for the total wealth of the com- 
munity. Now, obviously, if we move the weight B along 
the arm towards F we will have to move the weight C up 
towards 100 if the volumes of the weights remain un- 
changed. 

Now, as we are illustrating value and not gravitation 
the figures on the upper scale stand for value and where 
the weight C is supported indicates the value of the com- 
modity being considered. 

That is, if the volume of total wealth increase one- 
seventh it would tend to move up the value of steel (for 
instance), from 70 to 80, or if the total volume of wealth 
decrease it will tend to move steel down perhaps to 60. 

But the demand for steel may increase from causes 
other than the general increase of total wealth, it may be 



228 RIGHT AND RICHES 

from a campaign of advertising and education of the public 
in new uses for steel. 

Now this increased incentive to use steel obviously will 
cause a greater pressure of total wealth, B, upon the supply 
of steel, C. 

Now, if the special demand for steel cause its value to 
move up from 35 to 70 we shall have to move the weight 
B correspondingly to balance it and this will indicate a 
value decrease in general wealth only as measured in steel. 

Now these relations are as true between any other com- 
modity and the total wealth as they are of steel. The value 
of money is as truly dependent on its ratio to other wealth, 
and any special demand for it, caused by fear and the 
withdrawl of credit, will surely lower the money- value of 
the total of all other wealth. 

For the increased demand for money will cause people 
to offer a larger volume for a dollar. 

Likewise an increase of the money volume C even 
though maintaining its nominal value at 100, lowers its 
real value and increases the value of general wealth B so 
that it moves up on the scale on the lower arm. Decrease 
of money volume while not changing its nominal value en- 
hances its real value and lowers all other values as measured 
in money. 

But such lowering of the money-value of things makes 
them very much harder for the average person to procure. 



VALUE-POISE 



229 




230 RIGHT AND RICHES 

It is impossible for the total of values to increase or de- 
crease. The value of concessions often increases, occupy- 
ing a larger segment of the circle with a corresponding de- 
crease in the value of true output, wealth, or vice versa. 
But when both concessions and true wealth increase in 
pricej we may know that money has decreased in value. 
That is, that the volume of money C is greater, and conse- 
quently its units have less value, and naturally it takes 
more dollars to balance other wealth. That has been the 
case the past few years, when lands, franchises, etc., as well 
as food, building material and all wealth have gone up in 
money-measured price. The value of all things cannot 
change. It would increase the circle to over 360 degrees — an 
impossibility. The relative segments only can change. As 
prices are counted in dollars, an increase in their number 
and a lessening of the value of dollars makes an increase of 
prices — an apparent increase of wealth. 

But there may be an artificial temporary demand cre- 
ated by the over-selling of such commodity on contract — 
selling the market "short," as it is called "on 'change." 
Commodities such as wheat or the shares of a corporation 
are often sold on margin for future delivery, greatly in ex- 
cess of the actual supply, the seller depending on buying 
below the contracted price to fill the contract. If it be- 
comes known that there is an excess of such selling, the 
"shorts are squeezed;" that is, those who hold the actual 
commodity or contracts for it, raise the price and make the 
shorts pay. Then, after the date of settlement of such con- 
tracts, the price is likely to slump. 

' Just in the same way excessive debt — contracting to de- 
liver money — is in fact "selling the money-market short." 
After the panic is over the money market slumps and there 
is for a time demand for but part of the original volume of 
money. 



VALUE-POISE 231 

So we see that neither demand nor supply has any 
dependable fixity. Demand depends on the whims and 
fancies of fickle mortals. Supply, which is on the market 
and active, is likewise dependent on holder's fickle notions 
and fears of how little or how much demand will pay. 
Hence we see that there can be no scientific determination of 
value established; for it is impossible to found anything 
definite upon fear and selfishness, and such is the basis of 
exchange value. Kor selfishness holds out for excessive 
demands until fear impels the taking of a fraction of reason- 
able prices. 



15- 



CHAPTER II. 

Currency and Monky. 

"An article is determined to 6e money hy reason of 
the performance dy it of certain functions without regard 
to its form or substance.'' — Appleton's Encyclopedia. 

^niHAT is money? 

J^p Not a species of things of a certain form, 

^^1 weight, color or substance; not a class of things 
constituted according to certain prescribed rules. 
Money is rather an idea, or thought, objectified in in- 
numerable forms and substances. What is a noun? Not 
a tree or a man or a house. No, a noun is an idea. "Tree," 
"man," or "house" may, when expressing a different kind 
of an idea, be a verb. What is a preposition? A word 
being used to show a certain relation between two ideas. 
Now money is that idea, thought or conception, however 
expressed, which performs a certain function or functions. 
The identification of many things must be by their func- 
tions. What is a ferry? Not essentially a large boat or a 
small one, a long or a short one, a steam, man-power, gaso- 
line or sail boat. But it is a boat which crosses a stretch of 
water at stated intervals for the transfer of freight or pas- 
sengers. While it is engaged in performing this function 
of transfer it is a ferry. Now what is the function of 
money? It has two, one is to be currency, the other to pay 
debts. We will notice first that as currency. 

Whatever is accepted as a medium of exchange is 
currency. 

There are three distinct relations in which owners view 
property. First, that of seller. His relation is such that he 
must take the pains to find a buyer whom it suits. This is 

232 



CURRENCY AND MONEY 233 

true just the same whether he be producer or distributor. 
The last relation is that of buyer. The buyer has been at 
the pains to find property to suit. Property is of more 
utility in his hands. This is true whether he be the final 
user, or in turn is to become a seller. The medium rela- 
tion is that of currency. The possessor of currency stands 
midway between buyer and seller. 

To illustrate : A seller has shoes to sell. Their price is 
$3.50, but to get it he must be to the pains of informing 
buyers that he has them, and must by selecting, fitting, etc., 
suit the buyer. He who has bought new shoes has been to 
the trouble to visit a store to select the appropriate style, 
etc., and to get fitted. He tells you his shoes are worth 
$3.50. Now let us compare those $3.50 shoes in the dealer's 
hands, in the wearer's hands, and Three Dollars and a half. 
Three dollars and fifty cents is the value in each case from 
a casual view. Yet the wearer would not like to take the 
currency for them, and the seller should dislike to give it. 
In a real merit or utility sense, the shoes are worth less than 
the currency in the hands of the seller, but more than the 
currency in the possession of the wearer. The buyer of the 
shoes may have sold potatoes to get the currency. The cur- 
rency is worth more than his potatoes were to him. Goods 
bought are worth their currency cost, plus the trouble of 
buying. Currency is worth the goods sold plus the trouble 
of selling. This intermediate esteem of currency causes it to 
circulate, to become current. All money is currency, but all 
currency is not money. 

One of the functions of money then is to flow forward 
as goods flow backward from seller to buyer; to complete 
the circuit or current of trade, to be currency. 

The other function is to pay debts. The seller delivers 
his goods to the buyer upon a promise to pay in the future. 
So much money is stipulated to be paid. Now manifestly, 
to be a just payer of debts, it must have an unchanging value. 



234 RIGHT AND RICHES 

For if it is to pay for goods with a certain market value or 
purchasing power at the time of sale, the payment should 
have the same purchasing power at maturity, no more, no 
less. It must always be supposed, too, that aside from the 
real payment, interest is given as a consideration for wait- 
ing. Hence, there arises an office in a ''payer of debts" 
known as a measure of value. 

Money is made a payer of debts by a laz<u which stip- 
ulates that it shall be taken for all debts, or be a legal tender. 
That is, that the tender of the stipulated money is made a 
legal fulfillment of the obligation. This is the radical dis- 
tinction between ''lawful money" and such things as checks 
and drafts, which are usually accepted as money, but may be 
refused at the option of the creditor. Nevertheless, such 
checks and drafts are currency to the extent that they are 
taken, to the extent that they are Current. This, then, is 
the radical point that is commonly overlooked. That it is 
compulsory for the creditor to accept money in payment, but 
not other currency. 

The reason that this point is so extremely important is 
this : because the whole volume of Currency, and not simply 
the volume of legal tender money, is what currently or nor- 
mally controls the value of currency, including legal tender 
money. 

I would like to impress upon the reader's mind, for it is 
all im.portant to any intelligent consideration of money, that 
the total volume of currency controls the current value or 
money price of things, but in critical times this volume is 
reduced to the fund of legal tender money. 

It would be as reasonable to think that the anthracite 
coal supply alone determines the price of all fuel in Chicago 
or St. Louis, as to think that some part of the volume of 
money, viz. : the fund of gold or even the total fund of legal 
tender money, determines the value of money. 



CURRENCY AND MONEY 235 

The fact is that the whole volume of currency including 
checks and drafts is what influences the value of money, 
the value of a dollar. 

We hear it said: ''The increased supply of gold has 
cheapened money, and by decreasing its purchasing power, 
has raised prices of other property, but we need more cur- 
rency." It would be quite as reasonable to say : "The pro- 
duction of petroleum has so cheapened it that coal cannot be 
produced to compete with it ; what we need is more fuel." 

The value of currency at a given date is dependent on 
the volume of currency at that date. The whole volume of 
our currency then, and not legal tender money alone, is the 
measure of value. Here is the cause of all our financial 
troubles. Values are measured by the whole volume of cur- 
rency, while debts are payable with but one kind of cur- 
rency — legal tender money. 

In good times, checks and drafts based on credit con- 
stitute the larger part of currency; real money less than 
half. Debts are contracted on this basis of value. When 
depression comes, this ''optional currency" disappears, leav- 
ing only legal tender money on which to base values with 
which debts are paid. 

A perfect money will have a constant unchanging value. 
A perfect system of money will reduce the percentage of 
optional currency to the smallest fraction possible. It will 
dispense with nearly all currency but what is legal tender. 
Any money which is not a real measure of value is dis- 
honest money whether it be too cheap or too dear. 

No money based on a metal can honestly measure value. 

No material thing has intrinsic value. It has only value 

on account of its relation to general desire for it, and the 

hindrance of its supply. Both these conditions are ever 

changing. 

We can at a given time compare the value of everything 
to one thing. That would be making it the standard of com- 



^36 RIGHT AND RICHES 

parison. Suppose we compare the market price or purchas- 
ing power of all things with silver. Having once done this, 
say on the 1st day of January, 1907, it is not essential to 
care further about the metal silver, but only the ratio thus 
deduced. We might on that date arbitrarily declare that 
helium, a metal which exists in the sun and not on earth, 
was worth as much per ounce as silver. We should then 
have the following table of value: 

1 cow 30 oz. silver; 30 oz. helium. 

1 horse 60 oz. silver; 60 oz. helium. 

1 ton coal 10 oz. silver; 10 oz. helium. 

1 ton iron 20 oz. silver; 20 oz. helium. 

1 bu. wheat 1 oz. silver; 1 oz. helium. 

1 bu. potatoes ^ oz. silver; ^ oz. helium. 

1 lb. butter ^ oz. silver; ^2 oz. helium. 

From the above we may see that a cow is worth 30 bush- 
els of wheat, 60 pounds of butter, 3 tons of coal. A ton of 
iron is worth 2 tons of coal, 40 pounds of butter, etc. Now it 
is apparent that we may make the comparison just as com- 
pletely and more simply if we drop either silver or helium 
from the table. We may also simplify it by dropping the 
word ''ounce." We now have the following : 

1 cow = 30 helium. 

1 horse = 60 helium. 

1 ton coal = 10 helium. 
1 ton iron = 20 helium, 
and so on. 

Now we have 1 helium as our standard of value. 

One looks at a market report. He sees coal has dropped 
to 6 heliums, iron has advanced to 25 heliums, butter to 1 
helium. Now what cares he whether helium exists at all, 
even in the sun. He knows that he can now buy 1 ton of 
coal with 6 pounds of butter. That to pay the debt of 15 
heliums contracted he must give 15 pounds of butter. 

This is almost as true of a gold standard. A gold stand- 
ard is a fiction. We care nothing about the existence of 



CURRENCY AND MONEY 237 

gold. It is likewise purely fictitious that money is based on 
it. At the start it may have been, but we have now only 
the name, not the substance, as a basis. 

Jevons, "Money and Exchange," Chapter VIII says: 

"Those who use coins in ordinary business need never 
inquire how much metal they contain. Probably not one 
person in two thousand in this kingdom knows, or need 
know, that a sovereign should contain 123.27447 grains of 
standard gold. Money is made to go. People want coin, 
not to keep in their own pockets, but to pass it off into 
their neighbors' pockets." 

Value is not material, but mental. 

It is just as impossible to conceive of physical substance 
as a measure of value as it is to conceive of iron or wood 
having a certain speed. The hind wheel of a carriage has 
the same speed as the front. Gold being legally exchangeable 
has the same value as money. Speed is not a quality of a 
material, neither does it produce a permanent effect on it. 
It is a relation between it and something else. 

The attempt to regulate the value of money by basing 
it on gold is a failure. It would only be possible to base it 
on the natural, changing-commodity value of gold by con- 
tinuously redeeming it all every day or week. The value of 
gold is kept the same as money because the gold may be 
converted into money, and not because all money may be 
converted into gold; that were impossible, for money is 
many times the volume of gold. 

To think money tributary to gold, or its value based on 
gold, is as far removed from scientific fact as to think the 
sun tributary to the earth, and that it revolves around the 
earth daily. This is the basic error of popular financial 
thought. One may expect any sort of theories to be built 
upon such a basis. 

As a sample, it is asserted that this supposed basis, gold, 
is increasing so rapidly as to depreciate its value and dislo- 



238 RIGHT AND RICHES 

cate prices, and then the same person in the same breath 
will allege a shortage or scarcity of currency. 

Money is mistakenly said by some to be a means of stor- 
ing value. Were a ferry taken for the storage of coal, should 
it continue to be a ferry? 

While coin or bills are in hoarding they are not money. 
Money must be current. Standing water does not turn a 
wheel, neither is it a function of money to be hoarded. 

Cars are to move freight. Railroads must, indeed, pro- 
vide a greater number on account of their being at times 
converted into storage places by shippers. Many means are 
taken to prevent this ; demurrage is charged of so much for 
each day they are held. Yet at times we witness the dis- 
tressing famines in coal and other things, resulting from cars 
being, idle on sidings instead of performing their proper 
function. 

Now, just as a ferry may be constituted of almost any- 
thing that will float, however imperfect, so, many things may 
for a time assume the office of money; but while so acting 
they must cease to perform their previous function. A 
yacht may make a fine ferry, but it may not be used for a 
pleasure cruise without interrupting this use. 

There is no standard, naturally or physically evolved, 
that may be taken as a model or basis for money any more 
than there are natural ferries. 

In Ideal Money may in progress of time be perfected, 
but a perfect conception of ideal money is impossible while 
an inverted conception of business is held. When the true 
purpose of industry is seen to be to confer a blessing upon 
the user and not primarily to give profit or pay to the pro- 
ducer, then the true idea of money will be understood. 
Money will be then seen to be a certificate indicating that 
the holder has contributed so much toward the sum of hu- 
man happiness, and he will be given credit by society in such 
an amount on her obligations against him. 



CURRENCY AND MONEY 239 

A log may be made to answer for a ferry in some de- 
gree. Tobacco has served some of the purposes of money. 
But money is by the nature of its functions an artificial 
establishment. 

Credit is transmuted into money, but while so acting it 
truly ceases to be credit. Money cannot be credit; it must 
be cash. 

What change or transformation must be made in credit 
to cause it to act as money ? 

It must be changed from promise into fulfillment. Credit 
is a promise to pay. Money is "pay ;" its very essence con- 
sists in "pay." A piomise to pay implies future. A owes 
B $1,000, due in a year, yet B may be destitute during this 
year notwithstanding A's promise is good. Credit to be 
changed to money must be divested of futurity, even of 
promise. It must not agree to pay, but pay. The form of 
printing has little to do with the nature or function of what 
passes current and so constitutes money. A currency note 
may read that the maker, whether bank or government, 
"promises to pay," but this is not read nor considered by 
takers any more than its series number. It becomes money 
only through its being sought^ to be again paid to seller or 
creditor. Whenever money is sought that it may be col- 
lected, or that its metal may be used or hoarded, it ceases to 
be money. 

How, then, is credit transformed into money ? By some 
law or private arrangement or common consent, which 
causes a certain class of it to be sought by all. 

A usual method is to make it a legal tender for debts ; 
then B seeks it because C seeks it because D seeks it to pay 
A, and A seeks it because B seeks it. It performs a circuit 
because there is attraction at some point ahead of it in the 
circuit. Exchanging goods for money is not barter, for the 
reason that money is a ''medium relation' of property. But 



240 RIGHT AND RICHES 

credit which has general acceptance in payment for goods, 
acquires this relation until liquidated. 

Suppose you wish to use cloth and have a stock of po- 
tatoes which you do not wish to use. You will not trade 
your potatoes for apples unless you get a greater market 
value of apples, for it will be as difficult to get cloth with 
apples as with potatoes. Neither will you trade your po- 
tatoes for a note due in a year, however good, unless you 
get it at a discount or put in potatoes above the market 
price; for to get cloth with it, it must be discounted. But 
you will trade your potatoes for money, because money has 
a value equal to your potatoes, plus the trouble to sell them. 
And you know it has a value to the cloth-owner equal to 
the market value of cloth, plus the trouble of selling, even 
while it 'has a value to you equal to that of the cloth, less 
the trouble of buying. 

Notes (as credit) have no such value. No one wishes a 
note if he may get what it calls for instead. He will only 
take it to get the interest promised. 

Suppose a stranger in Chicago has the note of a New 
York millionaire with the best of credit for $1,000 due on 
demand without interest. Will he not have to discount it to 
get the money at once ? No bank will cash it in full without 
some consideration. It is only a piece of property surely 
worth $1,000 in New York. But it takes time to collect it. 

A New York Bank Currency note is taken by any bank 
from any one. There is no thought of being obliged to collect 
it. It is not simply worth $1,000 but is $1,000, not only in 
New York but in Chicago or San Francisco now. 

Money is positive wealth; credit is not wealth at all be- 
cause it is a negation. Money seeks a seller, credit a payer. 
Money is wealth because it is a means of exchange or use, 
just as a telephone is by being a means of communication. 
As electricity embraces less power than the steam which 
generated it and more power than it is possible to apply to 



CURRENCY AND MONEY 241 

ultimate use, but is yet invaluable because so readily con- 
verted to any purposes desired, even so money, though of 
less value than the property by which we acquire it, is in- 
dispensably useful because it may be readily converted into 
the multiform things we desire. 

Credit involves a Debit. There is no debit to money. 
The following analogy illustrates this: Credit is like a 
vacuum seeking to consumiC or swallow a certain quantity 
of matter. It is a minus quantity. Money is like a chemical, 
sulphur, for instance. Sulphur is a true element, a positive 
element. It is obtained by inducing another element such 
as calcium to part with it, which is done at a certain cost. 
Many elements having a "desire" or affinity for sulphur 
will give up the substance they hold and take the sulphur 
instead. Sulphur is not a minus quantity. Its positive ac- 
tion on the element causes it to release the desired substance. 
It is then recovered and the process repeated. This use of 
sulphur is very extensive in the arts. Sulphur is a chem- 
ical medium of exchange. 

Money has a greater affinity with sellers, and less with 
buyers, than have goods. This is why it circulates. Money 
depends for its value on the limitation of its supply. Credit 
depends for its value on payment. People look to the payee 
for the value of credit; to the seller and creditor for the 
value of money. Paying credit destroys it. Money is not 
lessened by being paid over. The purchasing power of 
money is increased with its decrease in volum.e, but its debt- 
paying power is not increased. 

Credit as credit will not be sought without it bear inter- 
est. As money it must not bear interest, else the interest will 
become an attraction to draw it aside from its current, and 
cause it to be hoarded. A note of one bank to another is an 
active debt. But its issue of "money notes" is not a debt as 
long as it continues to circulate. Holders of such notes do 



242 RIGHT AND RICHES 

not seek the bank for their value, but sellers, creditors and 
tax collectors. 

Some one has proposed to allow the whole volume of 
credit to circulate, but only a limited quantity will circulate. 
The supply must be so limited that money seekers' demand 
for it will be so strong as to make up for lack of interest. 
Simple credit due in a year will only be taken at a discount 
of 2, 4 or 6%. If due on demand it will be presented at 
once for cancellation as are checks. But with legal-tender 
power to make it money, it may never be presented. This is 
in a measure fixed money, the same pieces staying in circu- 
lation some time. Checks act as money, but checks are very 
transitory, they are canceled within an hour, or a day, or 
a week. Perhaps their volume may be twice as much to- 
morrow as to-day, or only half as much. 

We need a certain dependable volume of "fixed" money. 
Why? Because transitory money has a tendency to sud- 
denly disappear and cause disaster. 

The value of bank-checking, based on deposits, depend- 
ing on loans, is questionable. A great volume of money 
of any kind is not especially desirable. The desirable thing 
is steadiness of value. ''Fixed" money should be perman- 
ently and definitely fixed. The quantity should be wisely 
and unselfishly controlled so as to insure constant value. 

The value of money is inverse to the ratio of its volume 
with the demand for it. 

There are many theories about this ratio. Mill says its 
value is inverse, with the ratio of its volume, to the volume 
of trade. This is commonly accepted by economists as the 
correct statement of the basis of money's value, but this 
relates solely to its ''present-competitive-value" or "cur- 
rency-value." The most important value of money to be 
controlled is its future or speculative value. 

But even the currency value of money is not its ratio to 
the "volume of trade," if by that is meant the total volume 



CURRENCY AND MONEY 243 

of exchanges ; for the vokime of exchanges may be increased 
or multipHed without regard to the vohime of present wealth 
or present property. The "volume of exchanges" may be 
increased, or even multiplied, by exchanging evidences of 
debt. On the other hand, the facility of exchange may be 
mAich greater at one time than another, enabling exchanges 
to be made much more rapidly; hence, in greatly increased 
volume with the same amount of money in a given period. 
A dollar moving, or changing hands more rapidly, transfers 
more goods a day or week, just as does a car moving more 
rapidly. 

Let us look at this proposition from an individual stand- 
point. How much money will a man commonly have on 
hand? Obviously on the average, he will have an amount 
in proportion to his assets, and not in proportion to the 
amount that passes through his hands. Hence, with in- 
crease of wealth among the individuals of the community, 
that is among the multitude, the average people, there is a 
tendency to keep more money on hand. So the demand is 
increased. But this tendency continues only until the indi- 
vidual reaches a certain degree of affluence after which he 
begins to depend largely on his personal accounts and checks. 
This class is a minority, however, whose fortunes consist 
less of real wealth than of credits or concessions. 

Now this is not only true of money, but of any commo- 
dity. People have more carpets or more books or glass in 
proportion to the increase of wealth. Hence, increase of 
wealth increases the "currency value" of money, if its vol- 
ume remains the same. Increase of its volume decreases its 
currency value, unless there is general increase of wealth. 

From this we may deduce the following law of the 
volume of money : The volume of money should be in one 
continuing proportion to the real Wealth of the community. 

But currency's speculative value is what makes the big 
demand. The present real value of wheat may be 60 cents. 



244 RIGHT AND RICHES 

yet by excessive sales on futures the "shorts" may be made 
to pay 75 cents. The "short" selling of money — debt — is 
many times that of any other species of thing. Everyone 
who gives his "promise to pay" is selling money for future 
delivery. Mill neglects to take into consideration this de- 
mand — the use which causes the most desperate demand for 
money, that of paying debts. 

Now, what is debt? 

It is a contract to deliver a certain quantity of a certain 
species of property. Contracts are continually made to de- 
liver so many bushels of wheat, corn or oats, so many shares 
of a certain corporation's stock on a certain future day. It 
quite commonly happens that these contracts to deliver, 
taken in the aggregate, exceed all expectations, and when 
those who make them seek to fulfill their obligation they 
find the market thronged with others trying also to get the 
same things. The sellers are said to be "short" on the mar- 
ket. This competition for a particular commodity, say 
wheat, is not to get it to grind, to be eaten, but to fill these 
contracts. In com.mon parlance the wheat market is 
"bulled" or overcontracted. Thus prices may be jumped 
50% or more above what physical conditions warrant. 

I know of no market, nor any use for buckeyes, the seed 
of the beautiful tree scattered through the woods of the Mis- 
sissippi Valley. They fall off the tree and rot. It would be 
no trouble for farmers in many localities to pick up a bushel 
of them. They could easily afford to do it for twenty-five 
cents. But suppose a market gambler should, in the summer 
quietly contract for several million bushels of buckeyes at 
fifty cents. It matters not whether he had the least idea of 
using them. He could easily make contracts with a farmer 
in any district where they are common, to deliver fifty to a 
hundred bushels, as each would think he could go out and 
pick them up without trouble; but when in the fall he en- 
countered dozens of others also after them, he would hunt 



CURRENCY AND MONEY 345 

up the man he had contracted with and try to substitute 
apples, bushel for bushel. If he could not, he would offer 
two bushels of apples for one, then five or ten bushels of 
apples or potatoes or wheat, or ten dollars in money for 
every bushel of buckeyes he had agreed to deliver for half 
a dollar. He would now be at the mercy of his creditor, 
the buyer, or of those who might have buckeyes. 

Likewise is money of final payment, that which is con- 
tracted to be delivered when we promise to pay "dollars." 
Nothing but legal tender will do. We cannot tell how much 
others have contracted to deliver at the same time, but we 
may be sure it is many times the total amount of legal tender 
in existence. 

Now, if all these deliveries are quietly made, and each 
of the creditors pay out again what is delivered without de- 
lay, and it is passed on to fulfill other contracts, no harm 
comes; but if the creditors foolishly or maliciously lock it 
up for a month or a year in a safe deposit box, we are at 
the mercy of our creditors. 

Here, then, is the vital factor in the value of money. 

The value of money is no more based on gold than the 
value of cloth is based on the production of silk. The de- 
mand for silk depends on its use for cloth. It belongs to the 
cloth group. People desire cloth fabrics for many purposes. 
Cloth of cotton, wool, linen or many other fibres may be 
substituted for silk. The "group" is what desire seeks. 
The desire for money has no relation to any material what- 
ever, but to a group of entities however constituted that will 
be accepted by others. 

Now this acceptance is of two classes, voluntary and 
compulsory. This is the vital point so often overlooked. 
Whatever is voluntarily accepted is currency. Checks, 
drafts and various other forms of promise are usually ac- 
cepted voluntarily and act as currency. But the other class 
^rthe only class which is money of contract — compulsory 



^46 RIGHT AND RICHES 

money, money of last resort, must be made a legal tender 
by law. This is the only part of the volume of currency 
which creditors can be made to take in fulfillment of the 
enormous volumes of debt, of contracts for future delivery 
of money, periodically made in such tremendous volumes. 

Were it not for debts for payments contracted to be made 
in the future, we could well leave the volume of money to 
regulate itself. It would then do so automatically, for when 
the volume became proportionately too large as compared 
with demand, its value per unit would be less, and vice 
versa. 

Nothing is honest money that can be retired or diverted 
from the debt-paying supply in critical times. The supply 
of currency should as nearly as possible consist wholly of 
legal tender. Redeemable, or retirable notes, changeable 
volumes of checking accounts are all alike dangerous. 

The "banker" economists ridicule the words "legal ten- 
der," yet legal tender is a vital element of money. Checks 
and drafts are not legal tendef. They are but "half money." 
Legal tender may be termed "whole money," because it has 
the whole function of money, viz. : currency and debt-paying 
power. 

Checks cannot be made to pay debts without the consent 
of the creditor. Moreover checks may be issued in excess 
of banks actual legal tender holdings only as borrowers' 
deposit notes. Debts under our present system increase 
with increase of trade. But when credit is withdrawn, 
loans cancelled, and the power of issuing checks reduced 
to the volume of actual legal tender, and legal tender even 
more greatly reduced by the retiring of bank issues, we 
are then left ruinously short of currency to conduct busi- 
ness with or money to pay debts. Credit indeed responds 
to the usual trade demands of currency, but not to the 
crisis debt demands. Even coin is then hoarded. 



CURRENCY AND MONEY 247 

It is then plainly desirable that a much larger share of 
money be money of last resort, legal tender, which cannot 
be redeemed or canceled; and a much smaller share ''half- 
money." 

Credit is not an unmixed good. Any credit which is 
fictitious, which is not for real productive capital, is an evil 
and should be discouraged. No artificial encouragement 
should be given to private banks of deposit. Government 
should maintain banks in connection with the Postoffice, 
where deposits could be made and checked upon. Bank- 
note money is a crime, for it can be put in circulation only 
by being borrowed by someone. The banks still keep a 
"string on it." Bank loans should be greatly reduced by 
requiring heavy reserves. This reduction of currency by 
consequent reduction of checking, should be replaced by the 
direct government issue of "whole money." 

Money has ever and universally been issued according to 
convenience or accident. Usually large volumes have been 
issued by both banks and governments to get the profits or 
benefits of credit without paying interest ; to dishonestly get 
something for nothing, for it is as dishonest to try to steal 
interest as principal. Franklin protested against such issue 
by the Colony of Pennsylvania, when, while their issue was 
stable, it was proposed to increase it to raise an Indian 
war fund. Franklin insisted on the issue of bonds whose 
interest rate should cause them to be hoarded and tiius 
prevent them from flooding the currency market. During 
the Civil War some blundering money-issuing was done by 
the issue of "interest-bearing money." Had only the 
needed currency, increase, if any, been made, and then 
credit had been obtained by interest-bearing bonds, the 
money and bonds should both have maintained par with 
gold. 

16- 



^48 RIGHT AND RICHES 

Our present currency is entirely founded on the false 
basis of credit. 

The gold standard is entirely a fiction. This is the cause 
of panics. Money should be divorced from credit. 

Mr. R. H. Patterson, a very eminent English economist 
and opponent of the specie-basis system, says : 

"If much gold happens to come into the country, the note 
circulation is likely to be increased to a corresponding extent; 
if gold is withdrawn from us, the note circulation is propor- 
tionately diminished. If, owing to a temporary cause, all the 
gold available for monetary purposes were sent abroad, all our 
paper money would likewise disappear, and the country be left 
without money of any kind. A more absurd theory was never 
propounded. If metallic money fails us, we are on no account to 
use any other. This we are told to regard as a masterpiece of 
economical science; this is the great discovery which our ad- 
vances into civilization have revealed to us. The gospel of 
monetary science now is, that when a country does not want 
paper money, it ought to have a great supply of it; and when it 
does require paper money it shall have none. When a country 
has enough of specie, it ought to double its currency by issuing 
an equal amount of bank-notes, and when there is no specie, 
there should likewise be no notes. Is it necessary to discuss 
such a theory? In order to be refuted it needs only to be 
stated; in order to be rejected it only needs to be understood. 
It is a theoretical monstrosity against which common sense 
revolts — a burlesque of reason, which even the present genera- 
tion will live to laugh at." 

Money should not be redeemable in gold, or anything 
else. In the name of common sense, why should we expect 
to need less money in a year, or at any future time? 

To provide for retiring it is as fooHsh as would be the 
action of a city government which should pave the street 
with blocks provided with rings for the attachment of der- 
ricks, that they might be easily removed and piled up when 
not further needed. 

Should there be a flexible currency ? 

Should a yard measure be made of elastic? 



CURRENCY AND MONEY 249 

Some maintain that there is a critical time in each year 
when money is in special demand. I doubt it. If this were 
found after exhaustive inquiry to be true, it could be reme- 
died by requiring- a slightly less reserve to be kept by banks 
at such seasons. But I have heard no argument on this 
season of increased demand that sounded reasonable. When 
there is a large crop the demand for credit for speculating 
is no doubt greater. 

It is said that in harvest time the banks in the farming 
communities withdraw their deposits from the Wall Street 
banks to be loaned to farmers to pay laborers. But why 
permit banks in the country, where money is supposed to be 
lacking, to deposit their funds in the centers where there is 
already such excess of it as drives men mad? 

How silly is the cry, on the one hand, for the issue of 
money to pension soldiers, or for "what not" purposes, other 
than the needed supply of currency, and on the other, the 
contention for a ''gold basis." There is no scientific reason 
for the free coinage of silver other than the fact that two 
commodities fluctuate less than one, and that silver money 
would not have to be borrowed to get into circulation, as 
bank notes must, for coined silver would be paid out in in- 
dustry, but banks may not pay out their notes except on 
loans. This was the principal objection of the bankers to 
free silver. There has been since 1894 a greater inflation 
through banknote issue than would have occurred with free 
coinage. Every dollar of these banknotes had to be bor- 
rowed from the banks, and observe the result of this debt 
volume in the present panic. 

Credit evidenced by checks becomes current for short 
terms transferring property. Hence, such checks are cur- 
rency. Bankers and governments really convert credit, 
evidenced by notes, into currency. These notes must be 
for proper sums and payable to bearer on demand without 
interest. If not payable until a distant future, they will 



250 RIGHT AND RICHES 

only be taken at a discount. When bearing interest they 
will not be parted with, but kept for the interest. But such 
notes, during the time they are currency, cease to be credit. 
Although the issuer is liable for their payment, it is only 
when they cease to circulate. The citizen of Texas who 
holds a note issued by a Maine bank cares nothing for the 
bank. He looks not to the bank for pay, but to the mer- 
chant, whose goods he will buy with it. Money as long as 
it is money seeks property to buy, or creditors, and not 
redemption. But notes are a dangerous and imperfect form 
of money. There was never a greater lie put into circula- 
tion than that anyone in 1896 was afraid silver m.oney 
would not be good. 

Too many people conclude that no one but bankers know 
about the science of money. These same people leave city 
government to grafters. Aside from their interests, suc- 
cessful business men are likely to know less of the prin- 
ciples of money than poorer persons. 

There is also a large "party" of stupid persons, animated 
by prejudice against those who are provident enough to 
have Capital loaned out, who howl against banks and Wall 
Street without knowing why, and clamor for the govern- 
ment to issue unlimited volumes of money to be loaned to 
farmers at 2%, or to be used to buy all the railroads, or 
dredge rivers, or what not. These gentlemen commonly 
have long hair, and they somewhat strengthen the cause of 
banks by their talk. 

When one advocates that money be issued, either to give 
banks or government credit, he is ignorant of the first prin- 
ciples of money, or is '^interested." No less does it show 
ignorance to think that interest rates depend on the volume 
of money. I know that the Bank of England claims other- 
wise, but it gets millions of pounds in interest out of its 
claim. 



CURRENCY AND MONEY 251 

Rationai, Moni:y. 

What are the chief requisites of a nation's currency? 

First: It should by all means be issued designedly — for 
the purpose of currency — and not inadvertently or incident- 
ally as a means of saving interest, boosting prosperity or 
patronizing a powerful class. An intelligent city will not 
trust its water supply to chance, but employs expert en- 
gineers to calculate it. Why should there be no predeter- 
mination in this alone of the most vital instruments of so- 
ciety? Money should not be provided, as some persons 
build walks — when they have^ cinders to get rid of. 

Second: The money supply should be one consistent 
scheme. One complete comprehensive unity, planned and 
instituted solely for the performance of its peculiar func- 
tions; not a haphazard patchwork of incident and accident. 
To this end, the devising of a currency to be substituted for 
our present blundering, crazypatch currency, should be given 
over to a body of men learned in economics, and having no 
members who are interested in banks or stock manipulation. 

Third: It should have a constant value by means of a 
constantly maintained ratio to the volume of wealth. 

Fourth : It should be divorced from credit. 

Fifth : It should be sure. 

Sixth: It should be convenient of transfer. 

Seventh: Its volume should be free from any changes 
resulting from variations in confidence or credit. No change 
in its volume should be possible, except the changes deter- 
mined by the commission in charge of it, and they should 
be limited to a very small percentage in any year. 

Eighth : No private interest should in any manner con- 
trol or assist in its issue or retirement. 

Ninth : Its value should be entirely divorced from that 
of any metal or commodity. It should be made chiefly of 



252 RIGHT AND RICHES 

paper, a material of nominal cost, and the incidental profit 
should of course go to the nation. 

Tenth : As nearly as possible, everything but legal tender 
money should be eliminated from the volume of currency by 
the discouragement of debt. 

''I would change the form of these notes, so that instead 
of being technically, or in form, a promise, they should have 
stamped upon them the denomination as gold and silver 
have." — Senator Wright, of Iowa, U. S. Senate, 43d Con- 
gress; Congressional Record, Vol. II, page 751. 

When a correct basis for money has been adopted then 
let some properly constituted branch of the treasury pay 
this safe and honest money to the people through the retire- 
ment of bonds and other legitimate disbursements for public 
improvements, etc., until the whole present volume of bank- 
notes and redeemable currency should be replaced or such 
volume as scientific research should determine as desirable. 

Beyond the volume needed to maintain its constant 
value, government should not issue money, and it should 
pay a good fair rate of interest for all credit. 

The stock argument against irredeemable money is that 
governments are liable to over-issue. Are they more liable 
than banks to do so? 

But however imperfect a means of gauging the money 
value we adopt, is it reasonable to expect that it would 
be better than to leave the whole matter of value and volume 
to chance ; to changing conditions which tend to increase the 
volume when it is already too great and to reduce it still 
more when it is too low? 

Any tariff or impost taxation tends to complicate the 
currency problem by withdrawing a large percentage of the 
currency as surplus in the treasury, which, in effect, is ex- 
actly the same as canceling it during the time it is so with- 
drawn from circulation, as is recognized by everyone. The 
banks like this, for they get free government deposits. With 



CURRENCY AND MONEY 253 

a national system this surplus could be kept down to a frac- 
tion of the year's expenditures. 

The monetary commission referred to should work along 
with the treasury. Should money depreciate in value, pur- 
chases by government should be decreased and the money 
so saved turned into a hoard or reserve for the purpose. 
Should money increase in value, government purchases 
should be increased to pay out this hoard and any additional 
issue of currency required. It is a most rational plan, on 
all accounts, for governments of all kinds to do the most 
work in the dullest times, when it may not alone be done 
more cheaply but will tend to revive business. Interest is 
also lower in dull times. 

Even with our unnatural tax system, a measure of suc- 
cess could be made by the issuance of bonds payable on de- 
mand. They should, of course, bear more than 2% when 
stripped of their use as security for bank issues, and when 
payable on demand, else they would find no sale. Any bond 
should bear more than 2%. No community fit to live in can 
have an interest rate so low as 2% ; 5% is nearer a normal 
rate of interest. 

Should the surplus in the treasury grow too large, these 
bonds could be called and paid in legal tender. Should a 
deficit occur in the treasury, these demand bonds should be 
issued to make it good, and so keep the volume of money 
constant. 

The great English financial writer, Thomas Atwood, 
says: 

"Contrast all the dangers, the changes, the fluctuations, the 
unjust ruin, the unjust aggrandizement attendant upon a 
metallic standard with the security, the equality of prices and 
of values, the exemption from unjust losses and from unjust 
gains, and the general stability of all profits and of all prosperity, 
which a non-convertible paper currency presents, self-existent, 
self-dependent, liable to no foreign actions, entirely under our 



254 RIGHT AND RICHES 

own control; contracting, expanding or remaining fixed accord- 
ing as the wants and exigencies of the community may require — 
a non-convertible paper currency presents every element of 
national security and happiness without the possibility of in- 
juring any one class of the community. By it we may forever 
insure a wholesome range of prices, neither too high nor too 
low, but securing at all times the due reward of industry to the 
productive classes, and the due distribution of mutual rights and 
interests among all other classes of the community. I have re- 
flected upon the subject for twenty years; I have continually 
turned it in my mind in a thousand shapes and ways, and I still 
most firmly retain the opinion above expressed. And one im- 
portant fact I ought to mention, in confirmation of this opinion. 
I have never met one single individual who has had leisure and 
disposition to turn his thoughts to this subject who has not 
fully adopted the same opinion in the end. 

"If these arguments are wrong, is it not strange that no 
one has ever been found to point out their error?" 




CHAPTER HI. 

Credit. 

HE word credit denotes two very distinct entities. 
When one's promise of future payment is potent 
to obtain property, either by reason of a good 
character, or on account of possessing such assets 
that one may be compelled to pay, such person is said to 
have credit. The more correct or definite terms for this 
ability to obtain credit are credence, credibility or trust- 
worthiness. 

When one holds the promise or obligation of another, 
or has a balance at a bank — a clearing-house of credits — he 
thereby owns a portion or share in the present or future 
wealth of the community. We might term this "latent title" 
partnership, or undivided interest in property, existing in, 
or accruing to, the possession or stewardship of persons, 
perhaps unknown to the creditors, who owe a correspond- 
ing debt or obligation to deliver it. This is a meaning far 
from the other, though the two are usually confused. The 
first is but the ability to contract debts. The latter is an 
ownership of property as yet unapportioned. 

''Confidence" is that condition of thought which gives 
credence. Fear destroys confidence. But confidence refers 
not alone to giving credence to persons; it is not alone the 
faith in the trustworthiness of persons, but faith in the suc- 
cess of enterprises. The value attaching to property de- 
pends on confidence. Panics annihilate wealth by destroy- 
ing confidence. 

It is often mistakenly asserted that there is as much real 
wealth in the country after as before a panic. It is not so. 
The real wealth is the general estimate of the importance of 
things, goods or enterprises. 

355 



256 RIGHT AND RICHES 

Credit, latent-title, accrues temporarily to different in- 
terests with the output of wealth. The growth of a crop 
means a credit to the land-owner and tenant. 

The steel company sells its product, for which it secures 
to itself in return the transfer of credit in banks. If its 
business is profitable its stockholders have a credit accruing 
for which the company transfers this credit to them in divi- 
dends. This credit, latent-title, is constantly accruing to 
owners of capital, concession or loan obligations. This 
quasi-title is floated or transferred, either by the transfer 
of the promises, the debt-obligations of debtors ; by the 
handing about of the specific notes or bonds, or by trans- 
ferring by checks the debits of banks guaranteed by the 
pooled promises held by banks, from their debtors. 

Credit is a promise to deliver. It involves a promisor 
called a debtor, and a promisee called a creditor. A date of 
delivery may be stipulated or left to the option of either 
party. A loan that m.ay be paid or declared due at any time 
is termed a Call Loan. The property promised may be 
specified, or only a certain vahie promised, the kind to be de- 
termined at delivery. 

We deliver our baggage to a carrier and get a check 
promising to redeliver to us the certain trunks or pieces. 
Wheat is delivered to elevators, and receipts taken promis- 
ing so many bushels of the same quality, but not the same 
specific wheat. These receipts are bought and sold more 
largely than the specific wheat. 

In rural districts it is quite common for one person, who 
is known at the general store, to give in exchange for labor 
or goods, an unspecific order on such store ; not for so much 
flour or sugar, but for so much value of any goods selected. 
He will pay the store at harvest. Department stores in 
cities, commonly, upon the return of goods not desired, issue 
a credit check of like nature to such orders. 



CREDIT 257 

The promise to pay money, while legally specific, is not 
so in general practice. Few notes are actually paid in 
money. Most are paid by giving another form of credit 
due on demand — checks. The holder of a note may, in some 
instances, even be able to demand gold, a special kind of 
money; but this power is rarely enforced. Money is de- 
manded in time of panic, to some extent, but not universally, 
else few should escape bankruptcy. 

Credit is not capital, but its principal use is to procure 
capital. One may buy a diamond or a coat with debt. This 
simply implies that he expects that wherewith to pay, either 
from his salary or other income. 

Interest is usually charged for credit. When one fur- 
nishes funds or goods and waits a year, he charges in addi- 
tion to the cash price the current rate of interest. Hence, 
the borrower cannot consistently borrow except he put the 
results of such borrowing to procuring him increase where- 
with to pay such interest. 

I may buy one piano and hold it a year and return it 
with 6 per cent, interest added, for I have had that much 
pleasure from the music; so that I take the interest from 
my other income. But if I may be able to sell them at 10 
per cent, above what I pay, I can buy a thousand pianos and 
pay 6 per cent, interest thereon, for by distributing them to 
users I add to their value. They are my capital. 

Credit is largely given for capital. A wishes horses and 
equipment to grow crops. B has them, but he has not faith 
in A's ability to redeem his promise to pay for them at har- 
vest. But when C, in whom he has faith, endorses A's 
promise to pay, he takes it for the capital A wishes. C 
thereby gives A credence wherewith to get capital. Now if 
A succeeds in growing a valuable harvest, he may through 
exchange redeem his promise to B, and thereby he may 
then obtain some credence with A on his own account. 



258 RIGHT AND RICHES 

A feature of credit overlooked is this : That while cred- 
it is primarily based on some species of tangible property, 
such as lands, merchandise, etc. — either existent or to be 
produced, which is looked to as a means of payment — this 
credit in common practice comes to be largely superimposed 
upon other credit. For instance : A has tangible assets, land 
for instance, of a value of more than $10,000. He gives B 
a mortgage on this land for $10,000; B puts up this mort- 
gage as collateral at a bank and gets a checking account of 
$10,000. He has his check certified for this amount at the 
bank, and puts it up as security with D for stocks worth 
$10,000. Now here are four $10,000 credits based on an 
original $10,000 of property. In actual practice, this repe- 
tition of credit goes much further, even to ten or more times. 
Banks extend a credit to borrowers of more than ten times 
the actual money in their vaults. 

In every community there are those with sums of credit 
that they do not immediately need to spend. Salaried persons 
save part of their salaries. Merchants have not use for their 
daily receipts until certain demands mature. Farmers sell 
their crops and have no need for the proceeds until new crops 
are to be planted or improvements made. A dealer in credits 
borrows from several hundred these small sums of credit 
and money aggregating, say, $10,000 at little or no interest. 
With this accumulated sum he buys from the lumberman the 
note of the builder ; from the grain grower, the note of the 
stockfeeder; from the factory, the note of the merchant; he 
also loans money to the brickmaker to pay for labor and fuel 
to complete his kilns of brick ; the ice man to store his 
houses with ice, and so on. Now the sellers of these notes 
do not immediately need all the cash, but they simply allow 
the credit dealer to owe them the amounts due on demand 
or upon their written order. 

It may be that the grain grower wishes to buy more land 
and it will be months before he gets what suits him. It 



CREDIT 259 

will perhaps take the factory some weeks to pay out the pro- 
ceeds of the note given, for wages or supplies. The lumber- 
man may not wish to pay for new stock for weeks, hence 
the credit dealer will not need to pay out all of the $10,000 
he borrows in order to secure $10,000 of notes. He may buy 
at least $40,000 of notes therewith. 

When the manufacturer pays his men they will pay the 
money to the merchants, who at once deposit it with him 
again. So of payments made by all other borrowers. Such 
credit dealer is called a banker. Many persons think a 
banker must be very rich to loan so much. But they forget 
that he may be borrowing quite as much as he is loaning. 

A banker needs to be able to judge how much to loan 
of what he has borrowed, by guessing how much redeposit- 
ing will be done and how much checking out. He must also 
study applicants for loans to determine what credence they 
should have. But being a banker does not tend to give a 
knowledge of national finances any more than being a black- 
smith does. 

But, it may be asked, how can one deposit abstract credit 
in a bank? 

By depositing checks, notes or drafts. 

How does this help the bank ? It enables the bank to 
make loans, to give checking accounts to customers, and 
take the responsibility of meeting their checks with part of 
the cash on hand, because it has these credit resources to 
realize on if required, by rediscounting them. 

Is a bank of use in a community? Yes. It serves peo- 
ple in various ways. First, it furnishes a safe storage for 
funds, allowing them, at the same time, to be more conven- 
iently paid out by check without the trouble of counting, or 
the risk of loss in delivery. Second, it is a means of making 
the capital of those who do not wish to use it, available to 
those who do. 



260 RIGHT AND RICHES 

Now the lumberman could not hunt up several hundred 
persons with dribs of money in order to get $5,000. If he 
went to them they might not trust him, or they would not 
be willing to lend for any definite time. The banker bor- 
rows these sums and by having so many is able to take 
chances on lending a definite sum for a definite time, it being 
likely that if one calls for his deposit, another will make one 
as great. He needs only to keep a certain percentage of re- 
serve. Most people are not afraid to trust him.. He virtual- 
ly endorses the loan to the lumberman. 

Suppose a library is formed by borrowing ten books 
from each of 5,000 persons, each of whom may now have 
the use of 50,000 books instead of ten. A loan library is a 
"book bank." A livery stable, if it borrowed its rigs, would 
be a conveyance bank. This plan is proposed with freight 
cars. A pool would borrow all idle cars for a day or year 
— however long the owners had no need of them — and re- 
loan them. This principle gives the great efficiency to Pull- 
man cars. They are diverted to the line of heavy traffic. 

The business of production and distribution would be 
much hampered if deprived of banks. A producer may not 
have great wealth, yet he finds that retailers desire ''time" 
if they buy. He can take their notes if he may discount 
them. But he may even need to borrow, so as sufficiently 
to finish his stock as to begin selling. The banker, seeing 
the progress of his stock, may readily lend him credit to 
pay wages and for supplies. He must at the start have 
money to build his plant, or borrow it for some years on 
bonds or mortgages. 

A bank's principal dealings are in credit — in simple ab- 
stract promises to pay, not money, though the stipulation is 
so written; but to pay value, goods, wealth, property. A 
farmer sells his hogs, a miner his ore, a merchant his wares ; 
they may simply get credit, promises to pay, notes or checks. 
These they turn over to the credit storehouse, the bank, to 



CREDIT 261 

keep until, they wish specific property, or to cancel their 
debts. When one sells anything it is sufficient to get a 
check, an interest in "demand credit." He may then trans- 
fer it to others, in exchange for what he desires to enjoy 
or use for capital. 

But credit is not capital. Neither, if one get from the 
bank actual currency, has he acquired capital. Yet, while 
neither money nor credit is capital, they are the most con- 
venient means with which to secure it. 

Suppose you wish to go into manufacturing. You either 
have, or by some means secure, a balance or credit at a 
bank for $20,000. Now, according to common parlance, you 
have so much capital, but according to strict economic terms 
you have but the means of getting it as you require it. With 
this you buy stocks of "raw material" and such machinery 
and other equipment as you require. You require workmen. 
These fashion the raw material into useful shape. 

At the end of a week or a month they have thus added 
several hundred dollars of value to it. These workmen 
thereby acquire an interest or credit in the wealth being 
thus developed. Say their share is now $1,000. You buy it 
by paying them wages. To do this you must have other 
credit to transfer to them, with which they may buy what 
they see fit. How do you get this credit? Naturally you 
sell the product and get a transfer of the buyer's credit at 
the bank. 

But suppose you simply deposit your note at the bank 
and give the workmen checks. They may with these checks 
procure food from the grocer, coal, shoes, lumber, etc., from 
dealers, or pay installments on land — in short, procure sub- 
sistence as well as to make other uses of them, the recipients 
perhaps indirectly buying the output of your factory there- 
with. But this does not constitute this subsistence "cap- 
ital," for when bought for consumption it is no longer cap- 
ital. 



262 RIGHT AND RICHES 

This variety of goods bought by employes is, however, 
wealth — whether berries or vegetables picked to their order 
in exchange for credit. By this credit acting temporarily 
as currency, this variety of goods is "fluxed," or made to 
flow to balance the $1,000 product taken over by you. 

Now, while it could not be expected in practice that the 
various dealers receiving them would return any great por- 
tion of your checks to you, yet they will in fact return all 
the credit indirectly to employers generally; so we see that 
through credit the wealth of the gardener is transm.uted in- 
directly into manufacturers' capital, in the shape of part of 
your week's output, by his taking the wage checks which he 
may convert into capital for himself by buying part of it — 
perhaps a plow. 

A, B and C are depositors at a bank, have a balance. E 
borrows from it to pay for his stock of merchandise. Hence, 
A, B and C are indirect title-owners in E's stock. They 
may buy portions of it, and by checks to E enable him in a 
measure to liquidate. In this indirect way, owners of credit 
have a sort of indirect title in the goods of debtors. 

It should always be remembered that what is received 
by the debtor as a consideration for his promise is a distinct- 
ly different parcel of property from that which he agrees to 
return in payment. What he receives may be capital, per- 
sonal enjoyment or the satisfaction of other debt; what he 
expects to pay with may be the proceeds of crops or manu- 
factured goods. Thus millions and millions of credit repre- 
sent nothing but the power to absorb wealth yet to be cre- 
ated. 

Debt beyond a very limited amount is a great evil. It 
leads those of poor judgment to extravagance. Debts ma- 
ture, sometimes suddenly, and tremendous volumes simul- 
taneously. Confidence is destroyed, debtors lose their cred- 
ence. Awful loss and bankruptcy result. It is then that 
the legal phase of the contract is partially enforced which 



CREDIT 263 

requires a specific commodity; money, or even a specific 
kind of money, gold. Values of all other things are thereby 
sacrificed. 

Laws should be changed to remedy the very foundation 
of credit. A correct money system would be one of the 
remedies. 

But aside from the money question, credit vitally de- 
mands to be studied. 

If everyone could realize that it is quite as dishonest to 
needlessly delay the payment of an account, as to fail en- 
tirely to pay part of it; this would greatly reduce the debt 
volume. The risks of mercantile business are more than 
doubled by the necessity to carry needless accounts, and 
there is no surer foundation precept of success in business 
than for one to hasten to pay ones debts at the earliest 
moment. 

The economy to the public by increased use of money 
through banking, reminds me of the boy and the jam. 

"My son," said this boy's mother, "isn't it rather an ex- 
travagance to eat butter with that superb jam?" 

"No, ma'am, it's an economy," the boy answered, "the 
same piece of bread does for both." 

Beyond a reasonable volume, the benefit of banking is, 
that it makes the same piece of coin serve the banker to 
soak up many times as much of the people's good things, 
taken as interest. 



17- 



CHAPTER IV. 
Banks and Panics. 

''The work of righteousness shall de peace, and the 
effect of righteousness, quietness and assurance forever^ 

— Isaiah. 

A — The Recent Panic — Its Cause. 

B — Demand for and Supply of Capital. 

C — Dilation of Concession Value. 

D — The Part the Banks Play. 

B — Banking Laws. 

P — The Remedies. 

A— THE RECENT PANIC— ITS CAUSE. 

O banks promote panics? Are those cataclysms, 

which bring loss and destruction of wealth to all 

classes, whether patrons of banks or not, caused 

either by the reprehensible actions of bankers, or 

by the inherent wrongs of the banking system as legalized? 

But, first, what is a panic? 

A panic is a paroxysm of fear. It follows a period of 
prosperity; but is it an essential consequence of such pros- 
perity ? 

The recent panic has been productive of much interest- 
ing discussion and, as might have been expected, the views 
given are much biased by the business and connections of 
the reviewers. Among the many causes suggested are the 
following : 

First. "Lack of sufficient money." 

Second. "Use of capital more rapidly than it was being 
produced, causing inability to procure capital for future de- 
velopment." 

264 




BANKS AND PANICS 265 

Third. "Lack of an elastic currency." 

Fourth. "Excessive wages demanded by unionism." 

Fifth. The widespread thought that prosperity should 
"just naturally" be followed by depression. 

Sixth. General extravagance among the people. 

Seventh. The scare caused by prosecution of corpora- 
tion crime. 

None of these suggestions offer a solution of the prob- 
lem. Such widespread and depressing fear is attributable 
neither to incidental occurrences nor to normal activities 
however intense. Such fear indicates deep-seated and dan- 
gerous unrighteousness. 

The first assumption — the insufficient supply of money — 
is mistakenly inferred from the increasing interest rate. The 
second, because the price of securities fell. The causes of 
the panic were obviously conditions accompanying the pre- 
vious strenuous prosperity. 

What is prosperity? 

Webster defines it as success; well being; happiness, 
stripped of certain parasitical conditions which accompany 
it; national prosperity means that people are advancing to- 
ward their rightful condition of peace and plenty. 

But many adverse phenomena commonly accompany it. 
You often hear it said that a town is prosperous which has 
many saloons. Here is a sequence v\^hich is not a conse- 
quence, but the reverse. A prosperous city will give sup- 
port to more saloons than a dead, dull place, but this does 
not change the fact that the saloons, far from making a 
place richer, make it much poorer. 

Likewise, a large volume of debt is likely to accompany 
prosperity, but this volume of debt does not promote pros- 
perity, as many are deluded into thinking, but hinders and 
finally destroys it. 

Prosperity does not imply debt. 



266 RIGHT AND RICHES 

During prosperity, however, there occurs the natural 
expansion of industry; simultaneously there is likely to be 
more or less inflation of debt. A panic is the collapse of 
this inflation ; and this collapse, like some terrible explosion, 
is destructive of all property values. 

Is inflation essential to expansion? 

It seems to be quite commonly conceded that it is; so 
much so that the two terms are confusedly used as synonyms. 
It is time for a little careful thinking along this line. 

We have expressions from supposed "masters of finance" 
showing that even they are deluded by this illusion. The 
parent of this absurd thought 'is the common, mistaken no- 
tion that wealth must be loaned to become capital. This 
arises from the fact that the ordinary person is ready to 
admit that he knows nothing of the great mystery (?) of 
finance, and to fall down on his knees to the banker and al- 
low him to do all his thinking on the question. 

Now, bankers are simply men, biased by their interests 
and warped by the phenomena most common to them. In 
their daily business, bankers see wealth applied as capital 
solely through the process of loans ; ergo, they come to for- 
get that only a fraction of the capital which contributes to 
industry is borrowed. Hence, arises the delusion that Credit 
and Capital are synonymous. The logical conclusion from 
this fallacious premise is, that the more prosperity we have 
the more credit, hence, the more debt we must have. 

The author has no prejudice against bankers. They are 
not worse than men in other lines, nor more likely to try to 
conspire against the common good. However, they are able, 
more effectively than men in other lines, to influence legis- 
lation for their selfish purposes, because of this willingness 
of people to admit that financial matters are a mystery be- 
yond them. Further, they are liable to do infinitely greater 
damage by their selfish dictation of legislation, because of 
the more vital character of financial matters. Labor unions. 



BANKS AND PANICS 267 

farmers, or mine owners, are no doubt as likely to try to get 
special legislation; but people do not concede to them all 
knowledge in their respective lines; hence, evil results are 
sooner recognized. 

There is no delusion more widespread nor mischievous 
than that an accumulation of credits increases capital or 
helps business. Suppose there is $1,000 owing from A to 
B and from B to C and from C to D and from D to E and 
from E to F and from F to G and from G to H and from 
H to I and from I to A. There would then be $10,000 of 
credit. Would it not be a good thing if a clearance could 
be made and the whole thing wiped out? If each creditor 
held a note, this might be done by passing I's note from A 
to B, B to C and so on down the line until I held it himself. 
He could then destroy it. By this simple means of clear- 
ance a burden would be lifted from ten debtors, $10,000 of 
credit would be wiped out, yet with great benefit to both 
creditors and debtors. 

Banks recognize the advantage of clearing their own 
debts; hence, they have clearing-houses to cancel all debts 
among themselves that may be cancelled. Of the total mil- 
lions of international business, all but the smallest fraction 
is canceled in this way. This fraction represents the inter- 
national foreign investments of individuals. 

But the permission given banks to issue millions of cur- 
rency, which they can keep in circulation only by having a 
corresponding volume of notes due them, necessitates this 
immense volume of debt that is uncancelable. The collec- 
tion of a vast surplus by the iniquitous tariff system of taxes 
and by other careless and haphazard means of State and 
municipal revenue, which surplus is deposited in banks for 
long periods pending disbursement, is the basis of other tre- 
mendous volumes of unclearable debt. 

But while an increasing volume of debt is not essential 
nor helpful to prosperity, still our "paternal laws" operate 



368 RIGHT AND RICHES 

to cause its Increase with the increase of prosperity, while 
the naUiral tendency, if not frustrated by these paternaHstic 
laws, would be exactly the reverse. Most important of such 
laws are the laws confirming concession, and those granting 
favors to banks, for debt consists largely of the price of 
land, of bonds representing franchises, and notes for bank 
credits borrowed. 

Before we may hope to account for panics, we must come 
to a better understanding of the distinctions between Credit 
and Capital, between Money and Capital, between Credit and 
Money, between Credit and Confidence, 

The relations between money, credit and capital may 
seem illusive and baffling. A great demand for capital is 
often mistaken for a demand for money. A lack of confi- 
dence is mistaken for a lack of capital or money. The na- 
ture and identity of each is generally confused. Each has 
more the nature of a stream which rises and falls than that 
of fixed objects. 

Is there an equipoise or normal relation between the vol- 
ume of capital, credit and money? If so, what relative vol- 
ume of credit may safely exist, as compared to the volume 
of capital ? What volume of money is needed as compared 
to the volume of capital ? What permanent increase of con- 
cession value is possible as compared to increase of output? 

There is between these classes of property, and between 
each of them and the whole volume of property in general 
a proportion which, when disregarded, results in disorganiza- 
tion of business. The volume of capital must not become 
too small as compared with the whole volume of property, 
nor the volume of credit too large in proportion to that of 
capital. If these ratios are kept normal and the supply of 
money is not contracted nor inflated by legislative changes or 
the manipulation of the banking interest, credit will auto- 
matically regulate itself. 



BANKS AND PANICS 269 

It is most important to the understanding of these ques- 
tions that we recognize definitely what each of these terms 
include. Credit is die reverse side of debt. There can be 
no increase of one without an equal increase of the other. 
Capital is wealth-property applied to increase output. Capital 
is concrete. It has v/eight and bulk. It consists solely of 
a ''stock" of something useful, or becoming useful, or the 
apparatus used in handling such ''stock." It is not some- 
thing created with ink and paper. 

Persons go into debt for capital and for other property; 
such debt causes credit to accrue to him who loans, but the 
ownership of capital is not in any sense dependent on bor- 
rowing. 

Owners of capital do not have to loan it in order to apply 
it to production. They may apply it themselves, either per- 
sonally or by transferring it to a corporation for its stock. 
No debt is incurred by this means. Debt is in no degree an 
essential to any phase of production, though "wise ones" 
often assume that it is. Capital is an essential to Produc- 
tion, but capital does not arise from debt. It arises from 
devotion of wealth to aid production. Wealth is a stream 
from output. It accrues to Laborer, Capitalist, and Conces- 
sionist. These may consume it or employ it in production. 
Credit and debt come about by a number of persons becom- 
ing borrowers of property, and another number becoming 
lenders, or what is the same, a number buying property on 
time from others who sell on time. 

But such buying or borrowing is not essentially for 
capital. A user of capital is not necessarily a borrower. 
Divorce from your thoughts all notion that money is capital. 
Now, if the amount of borrowing becomes abnormally large, 
credit becomes strained. But remember that borrowing is 
not limited to borrowing for capital; in fact a tremendous 
portion of debt is not for Capital but for Concession. A class 
of debt that goes far toward bringing on trouble is that for 



270 RIGHT AND RICHES 

land. But debt for stocks or bonds is more dangerous to 
the public. 

When credit is strained; when it is hard to borrow or 
renew loans, it is not because capital is scarce. It is because 
debt has become excessive; because the debtor class, the 
borrowing or buying-on-credit class, has become too numer- 
ous or has contracted debt out of proportion to the capital 
owned by them ; because there has been too many farms cut 
into lots and sold at fictitious prices — too many franchises 
capitalized and the stock, subject to too heavy bond issues, 
unloaded onto the public; because too much debt has been 
made both for capital and for property other than Capital, 
for property which gives no increase with which to meet 
interest and repay principal. It is because criminal stock 
jobbing has become so notorious as to destroy the capital- 
owner's confidence in corporate issues, as in the recent 
panic; because real estate prices, through speculation, have 
become double what output of wealth will pay rent on, as 
in some previous inflations; because too large a percentage 
of output is taken by idlers as rent or accessage, and with- 
held from the capital fund until borrowed. 

Debt and credit are created entirely aside from produc- 
tion and industry. A has $100,000 of property — wheat, cot- 
ten, merchandise, land; B signs a note to him for $50,000 
for half of it, and C for the other half. Here is no increase 
of property, no increase of capital, no increase or decrease 
of money, but $100,000 increase of debt. Credit and debt 
do not imply an increase, but a transfer of wealth, or, per- 
haps, only a transfer of a quantity of other credit evidences. 

Credit and debt are promises independent of all indus- 
trial operations. The "bull" element encourages debt; the 
"bear" element discourages it. Debt is normally reckoned 
to be paid from that for which it was incurred ; the principal 
from its sale and the interest from its increase of value, or 
increase of product. If for capital, the profit of the industry, 



BANKS AND PANICS 271 

or if for land, the rent is expected to exceed the interest. 
But much debt is for that which produces no income or 
output, being incurred with the gambling, or speculative 
desire to get something for nothing. 

Vacant property is bought with expectation of increase 
in value. Corporate shares which pay little or no dividends 
are bought in hope of expansion. Increase in prices of 
franchises and land is limited by increase in the general 
output of wealth in the community. On the whole, however, 
increase in such prices can exceed ordinary interest rates 
for but very limited periods. 

Buying on expectation of a rise in prices is speculation. 

All debt must be for something giving an increase, or 
some one must lose. If borrowing becomes too excessive 
panic must be the inevitable result. Speculation is likely to 
accompany prosperity : if too general it causes adversity. 

All interest, all rent, all profit, all enhancement of values, 
as well as all wages, must be paid from the output of in- 
dustry. Hence, when debt, which generally draws interest, 
gets out of proportion to output, trouble surely follows. 

Debt has always, and rightly, been regarded as an evil 
to be kept to the smallest bounds ; yet government, influenced 
by bankers and stock-jobbers, creates the occasion for most 
of our debt volumes; and this banking interest, through a 
sympathetic press, would make people believe debt a blessing. 

How lacking in shame are the banks, when a crisis comes, 
to turn down in cold blood applications for loans made 
by patrons, and at the same time appeal to the patriotism 
of those who have balances due them, not to withdraw them. 
What an evidence of rottenness in our financial system, that 
such an unnatural system is authorized. 

The extent to which productive exchange is hampered 
by lack of the medium of exchange is grossly exaggerated. 
It is hindered, even paralyzed, by panics. Ignorance, greed, 
dishonesty and fright — do stop the circulation of commerce, 



2^2 RIGHT AND RICHES 

even as physical excesses do the circulation of the blood; 
and a system of finance that has become weakened by arti- 
ficial stimulation, succumbs most quickly. While it used to be 
contended that workingmen needed stimulating drinks at 
their work, this theory now has few supporters, even in Ger- 
many. Likewise people will some day learn that artificial 
currency stimulation results in stagnation, paralysis. 

Production would not be one iota less if banks were 
required to hold at all times even 60% of their deposits in 
legal tender money. True, they would lose 6% or 7% on 
billions. Individuals can and will at all times, except dur- 
ing brief periods of fright, furnish to borrowers in any com- 
munity all the capital that there is any opportunity to put 
to productive use, and on a basis that is safe. In periods 
of great prosperity, when capital can make rates of profit 
above 6% or 7% — that is, when the real normal rate of 
interest is perhaps 9% or 10% — banks, because they get 
deposits freely from individuals and government, make 
mountains of loans at 6% or 7%, of which a large portion 
are unsafe. A slight scare comes, depositors ask for their 
money. The banks have but 5% to 10% of the amount of 
the deposits on hand. They cannot pay. Then the banks 
storm the Federal Treasury for deposits of public funds, or 
ask permission to inflate more. 

What a stupid mistake was recently made by the offer 
of $150,000,000 bonds that bank currency might be issued 
thereon. There was no scarcity of currency. The only 
trouble was that the bank loans had been too many times 
the amount of the actual money in the country. They owed 
too much to depositors; but these loans were rapidly re- 
duced. Banks do not wish to extend further credits in 
times of panic; rather to curtail it. And individuals do 
not then seek to make new loans, but only to renew old ones, 
to protect themselves against loss. Were all the gold of the 
world dumped into our own banks in the midst of a panic 



BANKS AND PANICS %n 

it would not promote the desire either to lend or to borrow. 
What delays recovery from a panic is the g-eneral disinclina- 
tion of men to borrow and begin new enterprises. The 
banks fill up with money and no one seeks it. Loans will 
go begging shortly, but these bonds will go on drawing 
interest. 

The attempt to cure the evils of inflation with further 
inflation, is as though the Colonists had bribed the savages 
to peace with rifles. It is like trying to put out a fire by 
pouring on gasoline. If this policy continues, the banks 
will get an act pledging the Government to redeem their 
unlimited issues, as well as guarantee their depositors, and 
Government and all will go down together. Why not learn 
that ten dollars per capita is just as good as $500.00 if let 
alone, and not juggled. 

But the big bankers use the currency for a sponge to 
soak up the wealth of the world and then squeeze it into 
their private coffers. The "country banks" are not con- 
scious parties to this, but are used by the metropolitan 
banks. What more right has a bank to refuse to deliver 
my money to me on demand than the liveryman to refuse 
my horse because it is a holiday, and he has it hired out at 
an exorbitant rate? 

The total fund of money remains of the same total value, 
notwithstanding the increase or decrease of its volume in 
number of dollars. It is the dollars, the imits that increase 
or decrease in value. Decrease in value of the dollar makes 
apparent, but not real, increase in value of all other prop- 
erty, for it increases for the time its "dollar price." 

To think that increase of money increases wealth is as 
absurd as to think that shortening the weight arm of a scale 
would increase the thing weighed. It would certainly in- 
crease the apparent weight. If we shorten the arm with- 
out increasing the size of the "weights" it will take more 
"weights" to balance the thing weighed. Now, what sense 



274 RIGHT AND RICHES 

would there be in shortening this arm, and making "pounds" 
smaller, simply to be able to say that we have more pounds of 
things? But if some special "interest" could get the sole 
monopoly of making the weight disks, and could charge a 
big rental for their use, don't you suppose this "interest" 
should try to get a law to shorten the scale arm so they 
could rent out more disks, just as the banks wish to reduce 
the value of currency so people must rent (borrow) larger 
numbers of their notes. 

Why not have honest weights and honest measures of 
value ? 

High interest rates do not indicate insufficient volume 
of money. The financial reviewers tell of the demand of 
borrowers exceeding the supply or quality of money in 
existence. Now, borrowing money would not take it out 
of existence, would not remove it from the available fund of 
money, for in actual reality, people do not borrow money, 
they borrow Credit 'or they borrow Capital — stock and 
equipment. 

Would any one be so foolish as to borrow money, store 
it away and pay interest? Perhaps one does occasionally 
give his note and get currency; but most often, a check 
which he seldom cashes. He gets Credit. This he imme- 
diately converts into concrete wealth, not credit nor money, 
but capital, or concession. Money cannot produce an out- 
put. Railroads, horses, machinery, stocks of goods, animals, 
contribute an output. 

One says : "I have a thousand dollars capital, 'money in 
the bank.' " What does he mean ? Not currency, gold or 
silver coin, or greenbacks. No one has that in the bank. 
He has $1,000.00 credit at the bank. 

Credit is not capital, cannot be made into capital, but it 
is commonly so called because one may readily exchange it 
for real capital. But we must be definite. We are now 
considering the volume of capital in the community, not 



BANKS AND PANICS 275 

what it is possible for you or me to get. Credit will get 
potatoes, but you would not say credit is potatoes. Credit 
will not carry cargoes of goods across the sea. It requires 
ships made of wood or steel. Money will not shelter a 
stock of dry goods from the rain, it requires a store-room. 
Money will not carry a railroad train over a river, it re- 
quires a bridge. It will not print newspapers; a press is 
necessary. Ships, buildings, stocks of goods, bridges, 
presses, are real capital. Money is not. This is not a play 
on words, but a scientific fact. 

What some industries suffer for, even on the crest of the 
wave of prosperity, is real capital, not money. Yet some 
of our "eminent financiers" do not perceive this. Even 
the great Henry George became confused regarding this. 

Let us trace the ordinary case of a man starting into a 
business, say that of manufacturing. He has $100,000 
"capital," according to the loose expressions of ordinary 
speech ; that is, perhaps, he owns some farm land, some flats 
in the city, some bank stock, a few shares of railroad stock, 
some real estate mortgages ; perhaps he has a bank balance 
of $200.00. He decides to start a factory and contracts for 
a building to cost $5,000.00. He has but $200.00 in cash, 
yet when the building is finished he pays for it in cash 
which he gets just the day he needs it by selling some mort- 
gages. Later, his machinery is delivered; $5,000.00 more 
becomes due; this he gets by selling some railroad stock, 
and he now has the bulk of his equipment. Then comes 
his "stock" of materials to be worked upon. Now he sells 
his bank shares to pay for it. Later, he has rents come in, 
sells some land, etc., to get in funds to take up the increase 
of "stock" accruing from, the work of his employes. At no 
time has he had money for capital. For brief periods and 
in small installments money or credit has been used in the 
exchange incident to the transfer of property — land, credits, 
railroad shares, etc. — into capital, that is, into stock and 



276 RIGHT AND RICHES 

equipment. But at no time has he held a volume of cur- 
rency out of circulation by his operations. This common 
speech which says "capital" for anything which may be ex- 
changed for it is well enough, just as one says he has earned 
his "bread" when he means the resource to buy bread or 
other subsistence needs. But in economics, "capital" is first, 
last and all the time limited to stock and equipment. 

Reviews of the markets, by those eminent in banking, 
and manipulation of corporation shares and bonds, account 
for a "weak market" as being caused by production exceed- 
ing the proper ratio to the existing fund of money — money 
being limited to gold, or to a general form of currency, ac- 
cording to the school to which the reviewer belongs. Yet 
the scientific fact is that neither the output of wealth nor 
the quantity of wealth which is available for capital is in 
any degree limited by the size of the fund of currency. 
There is no normal ratio or relation between the two, any 
more than between such output and the number of horses 
in use. 

In order to be definite on this point, I must risk being 
tedious. Capital is not money, is not derived from money; 
is not credit, is not derived from credit. A reasonable use 
of credit and money facilitate the application of wealth to 
productive purposes, but capital may be thus applied with- 
out the use of either money or credit. And the degree in 
which money facilitates such application is not in proportion 
to its quantity; more especially if this quantity is considered 
to be the funds of gold. Credence expands naturally with the 
success of production, as any person of ordinary observa- 
tion can see. If one succeeds with the capital you lend him, 
will you not lend him more? And does not the profit he 
pays you increase your ability to supply him ? But you will 
be able to get greater interest in prosperous times, and will 
demand more interest while he will naturally seek to cancel 
his debts. 



BANKS AND PANICS 277 

There is such a thing as an extraordinary demand for 
capital. Let us assume that it may at times exceed all pos- 
sibility of immediate supply. This comes about from the 
unnatural ''ebb and flood" of business, due largely to our 
panic-breeding system of finance, to the fact that business 
starts, runs high and then slumps. When business im- 
proves, all rush at once to enlarge and extend equipment, 
making the demand for capital abnormal. Then our sys- 
tem floods the land with an intoxicating supply of bank 
credit. 

But someone may ask, if you have money or credit may 
you not exchange it for capital? Indeed, but that is not 
necessarily increasing the existing fund of capital nor de- 
creasing the fund of money. It may get me more capital, 
but it may do so by taking it from you. What is needed is 
to have the available fund of capital enlarged. How? 

By such inducements as will cause those who have in- 
comes of wealth accruing to them, from rent, interest, divi- 
dends, etc., to diveH them from their enjoyment fund to 
their investment fund. Higher rates of interest, and greater 
assurance, or security from loss, have such tendency by dis- 
couraging waste. If large volumes of accruing credit — 
power to claim title to wealth — are being converted into 
capital, being put to work instead of being "cashed" and 
consumed, this maintains or increases the fund of capital. 
But if the rich credit-holders, income-getters, convert their 
income from credit into luxuries; if, instead of buying brick, 
steel, cement, machinery — stock and equipment — they buy 
wasteful personal supplies and consume them, this depletes 
the ''share" and "loan-carrying" volume, as well as the 
"wealth basis" — the real capital. 

A railroad does not need more money when in the inten- 
sity of prosperity it struggles to sell more bonds. It needs 
more cars, rails, bridges, sidings, etc. Why can't it provide 
these things from its increased income, one naturally asks. 



278 RIGHT AND RICHES 

That it should be able to is unquestionable. The reason it 
cannot is because with the growth of prosperity, the con- 
trolling "interest" in its affairs manipulates its capitaliza- 
tion — increases its issue of stock and bonds, without adding 
to its real capital. 

A high interest rate is not an indication of a scarcity of 
money; rather the reverse. Inflation, over-supply of money 
tends to enhance prices, which has the same temporary effect 
as real increase of wealth, as far as procuring profits to make 
payments of interest from borrowers to lenders is effected. 
When people see the prices of things advancing, they seek 
to borrow so they may speculate in them. Continued pros- 
perity depends on the following relations of credit, capital, 
money and property in general : 

First. The volume of credit should not be too great in 
proportion to the volume of all property. 

Second. The volume of capital should not be too small 
in proportion to all other property. 

Third. The volume of money should be constant in 
proportion to the whole volume of wealth, for this is essen- 
tial to the maintenance of money's constant value, and the 
consequent steadiness of markets, which promotes real pro- 
duction. 

Fourth. The volume of money need have no relation to 
the number or volume of exchanges. 

Fifth. The volume of capital is entirely independent of 
the volume of money. 

Sixth. The volume of capital is entirely independent of 
the volume of credit. 

vSeventh. The volume of currency, other than money 
(checking accounts, drafts, retirable note issues, etc.) should 
be the smallest possible proportion (commensurate with 
free movements of exchange) to the volume of unredeem- 
able, final legal-tender, debt-paying money. 



BANKS AND PANICS 379 

Eighth. The volume of credit should not become too 
great as compared to the volume of output ; for credit com- 
monly draws interest, and the revenues to pay this interest, 
whether obtained from rents, dividends or enhancements of 
value, must be supplied by current output. 

Ninth. Debt must always be equal in volume to Credit. 
No increase of one is possible without an equal increase of 
the other. 

The foregoing consideration of the relations of Capital, 
Currency and Credit to prosperity proves conclusively that 
prosperity was not interrupted by the scarcity of either Cur- 
rency or Credit. 

Let us now consider the assertion that lack of Capital 
put a sudden stop to that wild, strenuous scramble of trade 
which existed a few months ago. 

B— DEMAND FOR AND SUPPLY OF CAPITAL. 

Does the demand for capital in prosperous times tend to 
increase more rapidly than the output of wealth from which 
it is supplied? 

No. 

Notable writers have attributed the present alleged short- 
age of capital to the destruction of capital by the Boer, the 
Spanish-American and Russo-Japanese wars, and the San 
Francisco fire. These were indeed unfortunate wastes of 
capital, great losses to industry. But it may well be ques- 
tioned whether these wars did not, along with such waste, 
also retard business to such extent as to lessen in like degree 
its demand for capital. This, however, will not hold good 
regarding the San Francisco fire. That not only destroyed 
capital, but its rebuilding made the most intense demands 
for it. 

Professor Laughlin says : "The scarcity of capital is the 
important thing in the situation." But in the course of his 
reasoning he does not really have in view the scarcity of cap- 

18-' 



280 RIGHT AND RICHES 

ital; for he immediately says : ''When we hear it said that 
business must slow up, it means that all speculation for fu- 
ture values must azvait the groivth of new capital. * =i= * * 
The undermining of confidence in some of our large indus- 
tries has caused very serious liquidation in securities." 

In other words, speculative increase depends on output 
increase. Loss of confidence prevents re-investment. This 
does not mean scarcity of capital, but unwillingness to trust 
it to those in control of the corporations dominating the 
field of opportunity. 

We must see how small are the effects of all these wars 
and disasters on remotely subsequent conditions, when we 
recognize the brevity of a "generation" of capital, for cap- 
ital created to-day is in a large measure consumed in to- 
morrow's industry. 

That the waste or loss of capital at one period would 
cause it to be scarce several years later, is as unlikely as that 
the failure of a potato crop would make seed potatoes scarce 
several years later, and that the extensive use of capital 
would make it scarce, is as unlikely as to think that the ex- 
tensive growing of potatoes for a period of years should 
make the seed scarce. 

Deprivation of the peasant class, by a predatory ruling 
class through oppressive taxes or rents in Ireland or India, 
tends to make a dearth of seed for planting, as well as tools 
for cultivation of crops. The continued despoiling of crops 
by wars or marauding bands will likely cause a small plant- 
ing of seed, not essentially because seeds are scarce, but 
because there is lack of assurance of reaping the fruit. 

The important fact that capital is mostly supplied by the 
immediate period which puts it to use must not be over- 
looked. It is doubtful if it would greatly tax industry to 
supply in three years a volume of capital equal to the whole 
existing supply, should a demand suddenly arise that the 



BANKS AND PANICS 281 

world's capital be doubled. The following figures are an 
eloquent proof of this : 

The whole total capital invested in manufacturing in- 
dustries in the United States, according to the census for 
1900, was but 9,835 million dollars, yet the output was 13,- 
014 million dollars, or over 30% more than the capital. 

No statistics are available to show how much of this 
pseudo ''capital" of 9,800 million dollars consists of land and 
franchise values — concession — but no doubt, if we placed it 
at half, we should be far too low. On this basis we should 
have in round numbers 5,000 million dollars of real capital 
employed in manufactures, creating an output of 13,000 
million dollars, or m.ore than two and one-half times the cap- 
ital employed. Now to do this requires about 2,000 million 
dollars for wages and nearly 7,000 million dollars for raw 
materials ; but this 9,000 million dollars does not deduct from 
the output, but is still an effective part of it. A large part of 
this 9,000 million dollars may be continued as capital if de- 
manded, as the price of this raw material and wages earned 
can be reinvested in the capital fund if needed. 

Suppose 15% of this output were put to extensions. It 
would much more than double the capacity in three years. 
No doubt the railroads and mines, if true figures of actual 
capital were available, would show conditions similar to 
manufactures. Agriculture certainly would if the land were 
eliminated from the '"capital" employed. It has been asserted 
by one who has given the subject much study that the rail- 
road stock is 95% water. But industry does not demand on 
the average 33 per cent, addition of equipment. Ten per 
cent, would be tremendous when any extensive field of oper- 
ations is included. Perhaps 5% would be nearer the most 
extreme demands. 

From a product more than double the whole value of ex- 
isting capital, there would then be demanded but 2^^% of 
product to be applied as capital increase. This is not includ- 



282 RIGHT AND RICHES 

ing the capital which consists of stocks of goods either in 
process of -completion or sale, for such stocks are at comple- 
tion the output itself and are not consumed in their capital 
function, but flow on to enjoyment and reproductive uses. 

But most important of all we must remember that ev- 
ery addition to capital increases, in a geometrical ratio, the 
output of wealth available for capital. Hence, the natural 
tendency of industry, when not frustrated by adverse inter- 
ference, is to furnish for the added demand for capital a 
multiplied supply. Doubling capital is likely to quadruple 
output. 

The Hon. Lyman Gage, after recounting losses and ex- 
tensive use of capital in the construction of "railways, elec- 
tric plants, cotton mills, steamships, etc., which use he esti- 
mates at 5,000 millions of dollars in the past six years, says : 
"It has been further evident to thinking persons that the 
pressure for the use of capital has outm^easured the supply of 
capital." 

Does not Mr. Gage obviously forget that these electric 
plants, railways, steamships, etc., are still continuing in 
themselves to be the most intensely effective productive cap- 
ital, and that they are giving a multiplied output of wealth 
from which new capital may be constituted. Yet Mr. Gage 
proposes to supply this presumed shortage of capital by issue 
of emergency banknotes, to create it with printing presses. 

Even if it were a fact that enlarging industry tends to 
increase the consumption of capital more rapidly than it in- 
creases the output of wealth from which it is supplied, as 
these professors of "high finance" allege, then how, by all 
that is logical, do they expect to meet this excessive demand 
with the printing of "paper capital" — by the multiplication 
of I. O. U.'s? A bank's promise to pay, whether a currency 
note or the granting of a checking account, is not an addi- 
tion to the community's supply of capital, but only an obli- 
gation on the part of the bank to procure capital somewhere, 



BANKS AND PANICS 283 

somehow-— a mere bet by the bank that new deposits will 
meet the obligation. 

The excess of such obligations is indeed the sole basis of 
panics. Banks do not, in the very nature of their business 
cannot, limit loans to what they have got, but make them 
mostly with what they expect to get. 

Wealth must first he produced in concrete form and 
turned into the fund of wealth in return for credit. It is 
then withdrawn for enjoyment and for capital in specific 
form, and this credit canceled. No increase of wealth can 
be made but by growing, manufacturing, mining, etc.— by 
output. No increase or replenishing of capital is possible 
but by someone deferring use of some of this real output 
wealth and devoting it to capital. The real trouble crops 
out as we further read Mr. Gage's article in Everybody's 
Magazine. 

''Syndicates privately formed,'' he says, ''who had taken 
blocks of securities in expectation of selling them to the pub- 
lic, found that there was no public that would or could buy 
them." 

The undeniable fact is that these "Syndicates privately 
formed" are the "milk in the cocoanut." They have been, 
like vampires, for many years, sucking the substance of the 
people, as well as the corporations they control, by taking 
blocks of securities at a few cents on the dollar and selling 
them to the public by their "washing" schemes at close to 
par. 

But the public has come to know more of these "syndi- 
cates privately formed" than they did formerly. With this 
knowledge the public has also become fearful of their cor- 
porations and afraid of the banks they manipulate. 

Mr. Gage says further : "Under these unusual induce- 
ments =^ * * * banks took over hundreds of millions of se- 
curities of these corporations ; thus the delicacy of the situa- 
tion was greatly aggravated." 



284 RIGHT AND RICHES 

And does not Mr. Gage suppose that with legislation en- 
abling banks to deposit the securities of these very same cor- 
porations as security for additional issues of notes — "emer- 
gency currency" — that they would under the same "unusual 
inducements" load up with double the former amount of 
these securities? 

It is wonderful what a lot of information there is "be- 
tween the lines" of Mr. Gage's article. 

C— DILATION OF CONCESSION VALUE. 

All forms of productions would become progressively 
cheaper — easier of procurement — with the extended use of 
capital — increased equipment — and improved methods, were 
it not for the repressive power given by Concession to take 
an increasing share of output without giving any help. 

It is contrary to nature for prices to advance with pros- 
perity, as has been the case the past few years. The natural 
tendency of prosperity is to reduce the price (the real ease- 
of-acquirement "price," not essentially to change the money 
price) of all productions because of their more bountiful 
output with more plentiful capital. Food, clothing, houses, 
ships, railroads, highways, etc., should become increasingly 
available to all. The natural tendency is to maintain a nor- 
mal interest rate, higher, much higher than the interest 
rate of hard times (not the premium paid to get renewals of 
loans), but not tending to increase progressively with the 
multiplying productiveness of capital. 

We must remember first that interest "rate" is a percent- 
age and not a stated quantity. As prosperity advances, the 
natural tendency is for the owners of capital in an industry 
to receive a constantly increasing volume of goods, more 
tons of steel, more barrels of cement, etc., but of less value 
when measured by human endurance. 

To illustrate: Suppose one invests a hundred tons of 
pig iron, when it is worth $20. By immense production its 



BANKS AND PANICS ^85 

value is reduced in ten years to $10 per ton, but whereas 
the first year he got as net increase 6 tons, he now gets 12 
tons. His 12 tons reinvested has now a productive power 
in tons greater than 12 tons of ten years ago, but has no 
more value as measured in human endurance than 6 tons 
had then. This illustration of course does not apply to the 
ten year period just past, but would apply where the natural 
laws of industry were not frustrated. 

What is the natural basis of the interest rate of capital ? 
This is the important point for us to grasp. 

It is the percentage of increase which will, on the aver- 
age, induce owners to defer the personal-enjoyment-con- 
sumption of wealth, and devote it to capital. Obviously, 
users of capital cannot pay more than its reproductive in- 
crease. 

Suppose such user borrow capital in the form of cattle 
to feed on the free range. He certainly may not pay the 
furnisher of it as interest, more than the annual increase 
of the herd, but he may pay much less. Or again, we will 
assume that he has not free range. He must then first take 
from the herd's increase rent for this pasture, after which 
he must take any interest charges from the balance of the 
increase. Or if he owe no one for his capital, he must still 
first deduct the rent from the increase, then the rest of the 
increase will constitute wages for the labor occasioned and 
interest on the value of the capital. 

Furnishers of capital in all lines must ever divide the 
increase with Concession by paying accessage or rent either 
directly or indirectly. 

Herein, then, is the vital point! 

Concession invariably takes as large a share as owners 
will tolerate. When two hundred dollars' worth of oranges 
(above cost of care) grow on an acre of trees, which have 
taken perhaps $100 of capital to plant and grow to bearing 
size, what is the result? Is this two hundred per cent, in- 



286 RIGHT AND RICHES 

terestf Not by any means. The concession value in the orange 
grove is dilated. This new term seems needful, as "capital- 
ized" entirely obscures the real meaning sought to be ex- 
pressed. The land goes to $1,900 or $2,500 per acre. This 
$200 net crop is mostly rent, accessage, which this dilated 
concession power demands. 

Now, let us notice the corporate working of dilation for 
corporate issues are more vitally responsible for panics. We 
may have seemed to digress, almost to have forgotten our 
text, "Panics," but not so. 

Webster defines "dilatation" or "dilation" : The expand- 
ing of anything into greater bulk by its own elastic power. 

We hear, and we see in the press much about the "water- 
ing" of stock. If this expression "watering" has any defin- 
ite meaning, I take it to be the increase of a corporation's 
securities to an amount in excess of the market or exchange- 
value of its assets, or perhaps in excess of their profit-paying 
value or ability. But the term "watering" is also confusing- 
ly used to indicate the swelling or increase of capitalization 
to cover an actual increased value or profit-paying power 
in franchises or other concessions owned by such company 
(such increase perhaps being in consequence of progressive 
conditions in the community giving more patronage or from 
some power to charge higher rates). 

The word "dilation" expresses this meaning, that is, the 
swelling, expansion or distension of concession value which 
will actually pay dividends on more stock or interest on more 
bonds. 

What is the common history of corporate issues, from the 
beginning of the recovery from one panic until the crest of 
the inflation wave is reached, and explosion precipitates an- 
other? Take as an example a corporation manufacturing 
a staple commodity such as iron, owning beds of ores, etc., 
or one operating railroads, or gas plants, having franchises, 
or mines of coal or minerals depending on ore lands. Sup- 



BANKS AND PANICS 287 

posing such corporation to be "capitalized" at a reasonable 
cost of its "plant" — tangible equipment and stock on hand. 
As prosperity increases income, does the percentage of divi- 
dends increase correspondingly? No. Is the difference 
applied to extensions and enlargement of plant? No, not 
commonly. Plainly the property of the company is worth 
more when it is bringing in a larger income. Then what is 
done with this increased value which grows with geometrical 
ratio? Certainly we have not recently seen the increased 
output reduced in price. 

We might then expect that each share of stock would 
pay multiplying dividends, 6%, then 10%, then 15, 20 and 
30% ; that these corporations, able to use capital with such 
great increase, would double their capital stock and offer 
the public the new shares, paying these wonderful dividends. 
Either that or cut prices to consumers on their output. But 
they do neither. As the concession's value dilates they in- 
crease their stock and bonds. They issue a large quantity 
of bonds bearing only a stingy 4 or 5%, and sell them to the 
public in exchange for real capital to make extensions. But 
why do not the "public" investors start plants of their own 
and make 30% instead of buying these low-rate bonds? Be- 
cause the established corporations have the field, own the 
concessions. But do they pay their old original stockholders 
30 or 40 per cent? In effect, yes^ — if the management does 
not take advantage of their position to scoop up this profit, 
which is common. But they seldom pay a larger percentage 
in form, for they double, treble, or quadruple the stock issue, 
and turn the new shares over pro rata to old shareholders 
as a "share dividend," com.monly called "cutting a water- 
melon." In other words, the original holder of 100 shares 
is presented at various periods with 50 or 100 new shares, 
so that while he gets but 5 or 6% on each share he gets it on 
two, three or four shares instead of one. Or perhaps in ad- 



288 RIGHT AND RICHES 

dition to doubling the stock the bonded debt is doubled, 
trebled or quadrupled. 

Thus the dilating concession value is ''capitalized" or 
more properly speaking, ''securitized." Thus the public is 
made to furnish the real capital at 5%, while those on the 
ground floor, the concession holders, get 20, 30 or 40%. It 
is quite common, however, for the clique in control of ''syn- 
dicates privately formed," to defraud even the masses of the 
original stockholders by concealing the true profit earnings 
from them. In this case they take these new issues them- 
selves at a fraction of their face, and then, by disclosing 
the true profits or by exaggerating them and showing the 
wonderful growth to come and by "washing" the issues on 
'change until the public is led to expect still further enor- 
mous growth of profits, this controlling clique gets from 
the public perhaps double what the treasury of the company 
got for the new issues of stocks or bonds. The public will 
often buy on a present basis of 2 or 3% present interest or 
dividends, if the promises of growth are rosy enough. 

Mr. Stuyvesant Fish, in his article some months ago in 
the public press, displays an ignorance of economic science, 
for he says: "Despite the unprecedented output of gold, 
money is dear; and dear because of high prices and activity 
in trade." I have shown the reader that "dear money" is 
evidenced by low prices, and that high prices for the whole 
circle of things are a mathematical impossibility, and are 
simply the manifestation of cheap money caused by exces- 
sive supply. He, however, proceeds to cite the loss of 
"money" in the Boer and Russo-Japanese Wars. Yet there 
is no history of any loss of money in these wars. Mr. Fish 
surely means wealth and not money. 

The high wages he mentions are a further evidence of 
cheap money. But however untrained in the study of eco- 
nomics from society's standpoint, Mr. Fish is "up" on the 
practices of corporate manipulation. He says : 



BANKS AND PANICS 289 

"Wall Street has absorbed and is absorbing more than its 
share of the loanable fund. While banks outside of New York 
are lending more freely than usual at this season, yet that 
which they lend is instantly and persistently absorbed by 
Wall street. The New York Stock Exchange has ceased to be 
a free market where buyers and sellers fix prices through 
demand and supply, and has become the plaything of a few 
managers of cliques and pools. The investing public is out 
of the market * * * * simply because of distrust 
* * * * of the methods of corporate finance now in vogue in 
Wall Street. Indeed it seems to me that we are already em- 
barked on a long-needed Moral Financial Reformation, which 
like the Religious Reformation of the middle ages, will through 
much cruelty, work out good in the end. To the need of such 
a reformation the public is fully awake." 

Let us hope so, Mr. Fish. 

The watering of corporate securities, however, serves 
another very important purpose, viz. : When the pubHc 
clamors for reduced rates these corporation managers point 
to the "enormous 'capital invested' and the low percentage of 
dividend paid," as an excuse for not giving the naturally re- 
duced prices and rates which prosperity should naturally 
make available to patrons. This is how the public is kept 
from reduced rates and how the honest investors of real cap- 
ital are prevented from participating in the constantly in- 
creasing interest rate which a multiplying output without 
reduction of prices should give. 

A judge recently declared the law, reducing the price of 
gas in New York City from the exorbitant price of eighty 
cents to be unconstitutional, because that even though the 
securities of the company had been "watered" to cover the 
dilation of franchise value, yet there were innocent stock- 
holders. Pray, why are a few "innocent stockholders' " in- 
terests so much more sacred than the multitude of citizens' 
interests ? 



290 RIGHT AND RICHES 

D— THE PART THE BANKS PLAY. 

It is not herein claimed that concession values would not 
be ultimatel}^ increased without the help of banks, nor that 
depression of industry would not ultimately result from the 
increasing exactions thereof. Depression is sure to result 
from lessening the Reward of Production by the demands of 
increased accessage. But we are at present considering 
only increase of debt and its culmination in fright and panic. 

Banks promote this dangerous incubus of debt and there- 
by help to bring on the crisis in the stock market. 

This is the part the banks play. 

Nature is hard to circumvent. With increased produc- 
tion and prosperity it is impossible for any special interest 
to get all the profit. Some of it must be diffused in spite of 
the most ingenious scheming. This diffusing of prosperity, 
although it only reaches the average public in a fraction of 
the degree it should, does, however, raise the percentage 
that the public's capital will earn locally, from 4 or 5% 
up to 6, 7 or 8%. The great corporations continue to place 
large volumes of bonds bearing but 4 or 5% on the market, 
together with stocks which are then earning no higher rates. 

The public, by reason of the measure of prosperity exist- 
ing generally among the people, that has escaped the schem- 
ers, is able to get a greater rate of revenue from various 
local investments, hence does not absorb these corporate 
issues so readily. 

The banks magnify this apparent increased rate of profit 
from private investments as well as corporate issues ; for, by 
increased issues of their notes and by the extension of check- 
ing accounts to depositors of personal notes for loans, they 
progressively expand the volume of currency, thus decreas- 
ing its "unit-value" and inversely increasing the apparent 
or money value of all other classes of property, thus causing 
unhealthy speculation. 



BANKS AND PANICS 291 

These bank loans amounted in 1902 to more than 6,600 
milHon dollars or three times the total money in the coun- 
try and more than nine times the money in the possession 
of all the banks. By November, 1907, these loans had in- 
creased about 25%, or to about 7,500 million dollars. Think 
of it, a volume of debt giving no return to the public which 
was equal to more than three-fourths of the manufacturing 
capital of the land. Who pays the interest on this debt ? 

What do we need of this vast fund of fictitious wealth? 
This is the principal source of inflation which breeds panics. 
This is the booster of fictitious values; for all these loans, 
consisting of accounts subject to check, are performing the 
currency function of money. The apparent increase of 
values thus caused enables dealers in lands, lots, and even 
real wealth to reap actual profits. (But they are exceeded 
by the losses of holders when the slump comes.) These 
profits merge with true interest into the revenues of in- 
vestors, thus further raising the current interest rate. 

This advance of the current interest rate reflects again 
on the stock market with depressing effect. For the already 
great issues of big corporation's bonds must now sell cheaper 
to give buyers this higher rate. These concerns then need in- 
creased supplies of real capital, cars, engines, machinery, etc., 
to meet the demands of generally increased industry. ' To 
meet this need they offer bonds and short time notes bearing 
somewhat higher rates of revenue. These join with more 
widespread increased current rates in diverting investment 
from old issues on the market. 

The interest rate which people generally are able to make 
in business and land speculation grows to say 7%. Now, in 
order for a 5% bond to make a 7% return it must be bought 
at about 70 cents on the dollar. So that when the general 
rate of interest among the public grows to 8%, these bonds 
to pay 8%, so the public can afford to buy them, must be sold 
at about 60 cents on the dollar. 



292 RIGHT AND RICHES 

Additional issues cannot be put on the market in compe- 
tition. Some corporations must have new capital. Some 
railroads must have new cars, etc. What do they do? They 
turn to the banks, for the big stock-jobbers also dominate 
the ^'Central" banks. The banks furnish the funds for a 
while at the old rate. 

This is the beginning of the end. 

But why can the banks furnish funds at a rate below 
what the general public can afford ? The answer is furnished 
by a study of our banking laws. 

H_BANKING LAWS. 

No better example is needed of the danger to the public 
in trusting an interested class to dominate legislation, than 
is furnished by the laws passed at the dictation of the banks. 

When "free silver" was proposed these bankers were loud 
in their assertions that property could not "be created by 
law." Yet when their class selfishness seems to demand it, 
they expect government to reverse one of the basic laws of 
nature and commerce — to create capital out of paper. 

If Congress should hold a conference with the "Consoli- 
dated Counterfeiters' Association" or "The United Smug- 
glers' Union" and amend the laws to suit them, it would 
seem past belief. Yet when the country is threatened by these 
wholesale embezzlers, the head manipulators of banks, they 
are invited and asked what further favors they should like. 

This is not insinuating that bankers generally are crim- 
inals, though it might truly be stated that the procuring of 
some of our financial laws are among the worst of crimes ; 
for they are planned particularly and specifically to support 
the stock- jobbing dens of thieving, chief of which is Wall 
Street. 

Let us briefly summarize the National Bank Act which 
in so far as may be State bank laws are patterned after. The 
salient feature of this act is the section regarding reserves. 



BANKS AND PANICS 293 

At the start the more honest and intelHgent members of 
Congress recognized the need that banks carry a decent 
amount of reserve. They thought that a bank should at all 
times hold in its vaults at least one dollar for every four 
dollars it owed its depositors. This need would be apparent 
to one of "ordinary" intelligence. But those masters of the 
art of "making something out of nothing" thought not. 
Finally they beat the amount down by this masterpiece of 
scheming for the interest of Wall Street. 

This brilliant plan classified National banks or banking 
cities into three classes, with special privileges to those cities 
in certain classes, an action which had it been of popular 
benefit would have been enjoined and declared unconstitu- 
tional, as discriminating between States. 

Now notice the fine planning. 

The banks of New York City alone constituted the first 
class, known as "Central Reserve Banks ;" those of sixteen 
other cities,* the second class, called "Reserve City Banks," 
and all other banks the third class, commonly called "Coun- 
try Banks." The banks of the first and second classes were 
to hold 25% reserve, but the third class need keep only 15%. 

Now here comes the Wall Street clause. Instead of these 
banks each holding its reserve in its vaults so it would 
have it when demanded, it was provided that the third 
class banks could loan three-fifths of their reserves (leaving 
in their vaults but 6%) to the banks of the First and Second 
classes. The Reserve City Banks in turn may deposit half 
of their reserve in the Central Reserve, that is, in New York 
banks. 

Now, suppose such deposits of Country Banks increased 
the total deposits of the Reserve City Bank, say in Phila- 



*St. Louis and Chicago were later added to the Central 
Reserve cities, and other cities were added to the second class 
but without practical effect. 



294 RIGHT AND RICHES 

delphia, one-third, or from $1,500,000 to $2,000,000. The 
Philadelphia bank's reserve would now be $500,000, or no 
more than the amount of the country bank deposit, and yet 
it may deposit half of this in New York banks. But the 
Country Banks may, and mostly do, send their reserves di- 
rectly to New York. This is exactly as though two men 
should trade $1,000 checks and then say they each had 
$1,000 more cash. 

There is a lack of sincerity with regard to these banking 
matters on the part of the banks and public officials. 

Scrutinize the statement of a bank when it does purport 
to give one to the public, and you will see under the head of 
''Cash" assets an item termed, "due from other banks and 
the U. S. Treasurer" amounting perhaps to something like 
half of the cash they purport to have on hand. Yet you see 
no corresponding deduction for "cash that they owe other 
banks and the U. S. Treasurer." That is counted under the 
general head of deposits. 

Further these banks while earning 10 to 12% on their 
capital and surplus (the National Banks earned 10.98% in 
1902), pose as philanthropic institutions. When they loan 
you their credit at 6 or 7% they are "accommodating" you. 
But when you expect them to return the gold you deposited 
with them, you are "unpatriotic." 

An ex-Secretary of the Treasury, writing in a great 
Encyclopedia, says : "These National Banks have since 
their establishment received more than $4,000,000,000 of the 
Government's money and cared for it, thus doing the Gov- 
ernment a great service. "A great service" indeed, to have 
four billion dollars without interest at critical times, when 
call money is perhaps at 50%. It is a singular thing how 
many men connected with the U. S. Treasury graduate into 
bank officials. Can it be a compensation? 

When a bank fails, entailing great loss and confusion 
and its officers are prosecuted criminally, they often deserve 



BANKS AND PANICS 295 

sympathy. The banking laws are more criminal than such 
officers usually are. To allow banks to lend all but 6% of 
their deposits, and then prosecute the officers for receiving 
deposits after the bank is insolvent, is like allowing a child 
to play with great sums of coin and bills, and then beating it 
cruelly when some of it is lost. 

Now there could have been but one purpose for this re- 
serve scheme: It was to put the great bulk of the money 
of the country within reach of the Wall Street Manipulators, 
and they were not disappointed in the least with its practical 
workings. Mind you, this is real money that is thus gath- 
ered to the great stock gambling center, not just credit. 

In the recent panic this banking crowd deliberately and 
persistently circulated the report that the cause of the panic 
was the withdrawal of their money from the banks by the 
people. 

Yet what is the truth of the matter? (There are as yet 
no statistics available regarding the condition of the banks 
of the country, other than National, but there is no reason 
to suppose that withdrawals from them would be greater 
than from the National banks.) 

Circular No. 56, issued by the United States Comptroller 
of Currency on December 23, 1907, and giving the condition 
of National Banks on December 3, 1907, is full of interest- 
ing information. Amazing as it may be, it shows that the 
National Banks of the whole country actually held in their 
vaults on December 3, 1907, 26 million dollars more actual 
money than on November 12, 1906. How can such an out- 
rageous falsehood, as that hoarding made the trouble, be 
promulgated in the face of this statement? 

But where was all this money, that the banks of the coun- 
try could not meet their demands with it? Largely loaned 
on Wall Street. As we have outlined above, all National 
banks are supposed to maintain a sacred fund of 15% or 
25%, according to their class, to meet any unusual demands 

19- 



296 RIGHT AND RICHES 

of depositors. There has not been shown any extraordinary 
demand over the country in general at the beginning of the 
panic, but just the normal demands of a thriving business 
situation. Yet the banks were entirely unable to meet it, 
and turned their depositors away with various make-shifts, 
such as cashiers' checks, and what was euphoniously termed 
scrip, but was nothing more nor less than counterfeit money 
issued on a gigantic scale. 

I repeat, where was this great volume of money which 
was in the banks, a sum even in excess of a year previous ? 
The answer is given in the said circular, and is the key that 
unlocks the whole secret of the cause of this and previous 
panics. 

This is where the money was: More than 200 million 
dollars of this sacred fund had been received by the New 
York banks as reserve agents, as a sacred trust to be re- 
turned instantly upon demand. This statement shows that 
all the National Banks of the whole country together held 
on December 3, 1907, a total sum of but 660 million dollars 
in real money. Yet the trouble was not that the banks had 
too little money, but that they owed too much to depositors. 

These banks, with this 660 million dollars of actual 
money, had built up, upon it, liabilities to the total of 8,407 
million dollars, or about thirteen times the amount of their 
cash. And a further study of this statement shows that 
the most outrageous excess of liabilities to cash was found 
in the banks of New York City. 

These forty banks of New York City had received from 
the outside banks, and still owed them on December 3, of this 
vital reserve fund, on which solvency of the outside banks 
depended, with the promise to make instant return of it upon 
demand, the enormous sum of more than 200 million dol- 
lars, which, as can be seen, is about one-third of the total 
money held by all the National Banks. 



BANKS AND PANICS 297 

And how much money did these New York City banks 
have to meet this sacred demand ? The circular shows that 
on December 3, 1907, they had but 176 milHon dollars all 
told, to meet liabilities of every description. Yet in addi- 
tion to this reserve money which the country banks were 
supposed to be able to get upon call for it, these New York 
City banks owed their individual depositors the staggering 
sum of 586 million dollars. 

But it may also be said that the individual depositors 
also owed them, approximately, the same amount and that 
this would to some extent, be a set-off. This is somewhat 
true, as the theory of banking is built up upon the assump- 
tion that only about 20% of what a bank owes depositors 
needs to be kept actually on hand, to meet emergencies. But 
this 20% would be about 120 million dollars, or two-thirds 
of all the cash they had on hand. 

Still this is not all. They owed the United States Treas- 
ury 76 million dollars, or nearly half of the cash that they 
had. There was no offset to this; And they owed State 
and private banks and trust companies the immense sum of 
195 million dollars, and they had due them from these in- 
stitutions to offset this but the insignificant sum of 10 mil- 
lion dollars. 

They owed then, sums due immediately on demand, as 
follows : 

Reserves to outside banks $200,000,000 

Reserves to their own individual depositors . . . 120,000,000 

U. S. Treasury 76,000,000 

Banks, other than National, Net Balance 185,000,000 

Or a total of $581,000,000 

They had total cash of but 176 million dollars. These 
statements are almost past belief, but they are made by the 
Comptroller of Currency, and a copy of the statement can 
be had for the asking. 



298 RIGHT AND RICHES 

Now how would you go about meeting immediate de- 
mands for 581 million dollars with only 176 million dol- 
lars ? What could you do when the outside banks and your 
home depositors clamored for their money, but make an un- 
conditional surrender and throw the whole system of finance 
into chaos, spreading ruin and misery throughout the land, 
upsetting all lines of industry, cutting off the means of the 
employer to pay wages, and of the worker to earn bread? 

How great was the sum of misery the following winter 
throughout the whole length and breadth of the land — 
hunger, cold and desperation, followed by crime — all pre- 
cipitated by this criminal banking system. For there was 
no other probable reason for interruption of industry but 
the periodical plucking of their victims by the manipulators 
of this banking system. 

Yet what did these big magnates do but make a big 
bluff, appeal to the United States Treasurer, howl for an 
emergency currency, demand another bond issue, and then 
try to throw the odium of the whole criminal business onto 
the People and the Administration ? 

Is it difficult to see how profit may be made by *'The 
System," as Lawson calls the clique who dominates the 
forty National banks of New York City, and through them 
the big Insurance Companies, Railway Systems and other 
enormous aggregations of capital? Is it not obvious how 
advantage may be taken of such a crisis to pile up private 
fortunes ? 

Suppose Mr. Magnate, who controls several of these 
banks and several other immense corporations, has pretty 
well cleaned out his holdings of shares at top prices to the 
public, and has a big credit balance in these New York banks 
as depositor. All he has to do is to check out a few millions 
and put it in his safe deposit box, and Slam ! goes the bot- 
tom out of the market. He can then take his money out of 
the deposit box and buy back for 20 million dollars what he 



BANKS AND PANICS 299 

has recently sold for 100 million. This money machine is a 
veritable Titanic pump to exhaust the people of their wealth. 

And what do these New York banks do with this vol- 
ume of money they draw in from all over the land? They 
loan it "on call," that is, due on demand ; they loan it on the 
security of corporation issues as collateral, with the stipula- 
tion that if not paid on demand the securities may be sold 
to the highest bidder. But how may 300 or 400 million dol- 
lars of stock be thrown on the market at once? Who is to 
buy ? It would mean ruin to attempt it, and they know it. 

When men of moderate means fail to meet their obliga- 
tions they are declared bankrupt and put in Receivers' hands. 
But I understand that courts which were appealed to by de- 
positors to force banks to pay, would not entertain such 
suits. 

Do banks cause panics? 

Can they help but cause panics when they gather into 
New York City more than one-third of the real money de- 
posits of all the banks in the country, and use them to spec- 
ulate in fraudulent securities? 

The National Banking Law is a most complete and ef- 
fectual scheme to give entire control of the money market 
to the head stock-jobbers of Wall Street and thereby to give 
them control of the values of all property in the land. 

And yet they want more. They , are clamoring for the 
deposit of all the Federal revenues now held in Subtreas- 
uries. This would remove the last resource of safety. When 
the slump came there would then be no more "kind Uncle 
Sam" to go to, as his money would be included with the rest 
in stock deals. 

They are also crying for an emergency currency. That 
is, that when they have overloaded themselves with loans on 
collateral and otherwise, they may in a crisis issue "legal 
tender money" against this collateral. 



300 RIGHT AND RICHES 

When a clerk takes the funds entrusted to his care and 
speculates in stocks or bets on races it is called an awful 
crime. Why is it not a worse crime when banks take the 
money you and I deposit with them and hand it over to Wall 
Street gamblers, and not only endanger the loss of our de- 
posits but the whole system of commerce on which the peo- 
ple depend? It is fortunate that people generally were not 
so greatly in debt as at times of former panics. It was more 
strictly a bank and corporation panic this time. 

And yet, scientifically speaking, this system of greed is 
but the extreme concrete expression of greed latent in the 
thought of the people at large. It is the embodiment or 
dominant expression of the prevailing desire to get without 
giving. In other words, the widespread greed of the masses 
finally culminates in this overruling system of spoiliation 
which succeeds against all other plans of covetousness. 

Senator La Follelte has made the statement that four- 
teen men dominate the entire resources and business of the 
land through this system. Doubtless of this fourteen there 
is one individual who is dominant. Yet, dear reader, it is 
not A. B., or C. D., or E. F. who is responsible for this 
system. It is not the fourteen persons who are officially di- 
recting the workings of this system who are the primal 
cause of its existence. They are but the temporary directors 
or exponents of the culminated manifestation of the wide- 
spread greed of the community. 

Do not too quickly conclude that the foregoing state- 
ments are vague, metaphysical sentiments. They are hard, 
scientific laws of commerce. We have all read the story of 
the two greedy cats who quarreled about the cheese and how 
through their greed they were made subject to the monkey 
who devoured it all. Even so does the greed of the millions 
consume them, each greedy person contending against all 
the rest and beating them down to become the prey of the 
strongest. And this Wall Street system stands for the 



BANKS AND PANICS 301 

most seductive conception of greed, which has culminated 
in the manipulation of the most abstruse and elusive phase 
of economic forces — the currency or money supply. 

But if a means were instituted to exterminate stock- 
jobbers as the leaders of oppression were guillotined in 
France, their places would be immediately filled from among 
the ranks of the public. 

"For we wrestle not against flesh and blood, but against 
principalities, against powers, against the rulers of darkness 
of this world." In other words, against greed and fear. 

The extent to which greed may unconsciously affect 
public affairs is shown by the stingy voter being against 
measures of public good because he thinks it will increase 
taxes, even when he pays not one cent of taxes. 

Only that dominant thought which is avaricious will tol- 
erate legalized oppression. But there are many signs of 
improvement. You do not get the reply so often now when 
you discuss these abuses with citizens: ''Wouldn't you do 
it?" 

F— THE REMEDIES. 

The only sure cure is improved citizenship, and happily 
we are making great progress in this direction. Love and 
brotherhood will banish greed and fear. This improved 
citizenship is expressing itself in improved legislation and 
such legislation is helpful; it is effective, when backed by 
public opinion. 

Legislation embracing the following features might tend 
to curb this destructive system if enforced by honest offi- 
cials, backed by honest public thought. 

First. The reserve clause of our National Bank law 
should be changed to require each bank to carry its whole 
reserve in its own vaults until used to cancel its obligations. 

Second. Increase the reserve requirement to 35% for 
all banks. 



o02 RIGHT AND RICHES 

Third. Provide for the actual use of this reserve for the 
purpose for which it is supposed to be held, by providing 
that it may be paid out to meet depositors' demands by the 
bank paying 7 or 8% tax per annum on the amount its re- 
serve is thus depleted. And instead of an emergency cur- 
rency provide for a period of grace of a few days' extent, 
available both to the banks against their depositors and to 
those who owe the banks, by the payment of a certain reas- 
onable percentage as penalty to the waiting creditor. 

Fourth. Prohibit call loans, for they endanger the bor- 
rower individually and in the end the banks collectively. 

Fifth. Prohibit more than a small percentage of depos- 
its being loaned on collateral. 

Sixth. To prevent banks sending their money to New 
York and other centers, prohibit banks from receiving in- 
terest from other banks and forbid State banks loaning 
money outside their own State. 

Seventh. Compel banks at least once a month to pub- 
lish a statement of the actual cash in their vaults, the amounts 
owing by them to other banks, as well as what other banks 
owe them. 

Eighth. Reduce the percentage that a single firm may 
borrow of the loanable funds of a bank. 

Ninth. Prevent banks from paying more than 2% in- 
terest on deposits. 

Tenth. Forbid the investment of deposits in securities 
which mature at a more distant date than three months. 
This would cut out bonds and stocks. 

Eleventh. Withdraw the function of issuing currency 
notes from banks and replace such notes with legal tender 
money issued directly by government. Also provide for dis- 
posal of Treasury accumulations as suggested under the 
head of *'A Rational Money Plan." 

Twelfth. Establish Postal Banks. 



BANKS AND PANICS 303 

The recent action of the banks in refusing to pay depos- 
itors their money when due, that is, on demand, suggests 
the question, why should not all debtors at all times have a 
few days of grace? It is a well-established fact that values 
are more staple, where there is a long period of redemption 
from mortgages. These statutory redemption periods are 
good alike for lenders as well as borrowers and especially for 
the general public through prevention of panic. Why, if one 
owes a note or obligation, not give him twenty to sixty days' 
grace, with a reasonable penalty, not of court costs, but in- 
creased interest ? It would save many good men from fail- 
ure. If good for banks, why not for the people? 

In States where there is no redemption from real estate 
mortgage sales, values are seriously impaired thereby. The 
maker of the loan seldom really wants the money, but fore- 
closes while he is frightened. 

Is it not the duty of law makers to restrict banking to its 
safe and useful function? 

Properly restricted, banks are a useful and powerful aid 
to industry, prosperity and progress. 

A bank's proper function is to have a knowledge of its 
customers' proper standing and trustworthiness; to have 
such capital, and conservative and honest management as 
causes people to place confidence in it; and to lend its en- 
dorsement, backed by this popular confidence, to those cus- 
tomers, by giving them a reasonable amount of credit, lim- 
ited by the legitimateness of the purpose of their use of it, 
and by the bank's capacity after maintaining a conservative 
reserve. 

No interference with such function should be oflfered by 
legislation, but should conservative restrictions reduce the 
average net profits of banks from what they have been com- 
monly earning, 10 to 12%, I cannot see that great hardship 
would be done them. At any rate, the public has a right to 



304 RIGHT AND RICHES 

demand legal protection against the present panic-breeding 
system. 

No great permanent progress can be made by labor in 
securing its rightful wage ; no sure promise of safety can be 
made to conservators of true capital for its safety from loss, 
while banks may, in response to the criminal gamblers of 
Wall Street, inflate credit and currency beyond all bounds, 
with the resultant annihilation of both credit and currency. 
This leaves honest industry not alone without credit, but 
without a medium of exchange, and by such disorganization 
almost entirely without a market. 

Let industry grow up on a broad solid "Concrete foun- 
dation," and there will be a chance for permanent progress 
and reform. 

But currency and banking reforms will not prevent Con- 
cession from absorbing Rewards of Production in propor- 
tion to the increase of prosperity, and thereby finally curtail- 
ing output and causing depression. Such reforms can only 
prevent such siidden and violent collapse. Money reform 
will prevent the wild inflation of debt and largely prevent 
stock jobbing. But no system of money will prove a total 
cure for the evils of Concession. These evils exist under 
all kinds of money systems, but to prevent panics means 
much. 




CHAPTER V. 

The: Importance q-^ Industriai, Corporations. 

|ANKS, by reason of government patronage and the 
special privileges or concessions they have obtained, 
hold a place in the commerce and industry of to- 
day far beyond what is normal or safe. They are 
the cause of- an application of capital by the loan avenue, 
dangerously in excess of what is natural, economical or safe. 
Buying shares (not bonds) of joint-stock companies, thus 
applying capital directly to productive purposes without the 
incurring of debt or credit, is a far saner, safer, and more 
direct and economical method than by lending it tO' ( deposit- 
ing it in) banking concerns and trust companies constituting 
them a "blind pool" to relend it to others, to again relend or 
invest it for the purchase of capital. The corporation, both 
small and large, is one of the grandest forms of civilization's 
blessings. 

Dr. Lyman Abbott, addressing the People's Institute at 
New York on the "Coming Age," caused a sensation by de- 
claring that corporations were tending to fraternalism in 
industry. He pointed out that the stockholders of the great- 
est trusts had increased from hundreds to thousands, and 
said that if the number continues to increase, it will mean 
that the ownership of these gigantic corporations will be 
distributed more and more. He said : 

"Do not destroy corporations, if they will manage things 
for the good of the whole, and the people can make men to 
manage these interests properly and do away with the evils 
that exist in them to-day. As examples of the fraternalism 
which I say is coming, I might point to President Roosevelt's 
proposed tax on inheritances, Bryan's proposed tax on in- 
comes, Henry George's proposed tax on all natural opportunities 

305 



306 RIGHT AND RICHES 

and the whole country's proposition that the people shall 
operate the great highroads of the United States." 

Civilization — brotherhood — impels men to have mutual 
interests, to trust each other. This suggests another unfor- 
tunate reason for the abnormal volume of bank deposits, 
that is, that the unscrupulous methods of some of the great 
stock manipulators prevent investments in stocks. 

Corporation scrutiny and restriction is coming, none too 
soon. The mistaken outcry against the mere magnitude of 
corporations we have heard for so long is wasted energy. 
But it is of the greatest importance to society to have all 
capital employed at useful work as well as all labor. A 
thousand people with $100 can furnish $100,000 capital if 
it may be collected together. But corporations offer a better, 
steadier and more direct process of applying this capital 
than do banks. The industrial corporation may not preclude 
the need of banks, but rightly restricted it would take their 
place in a large measure as a place of deposit for capital. 

But to be reliable they must be restricted against issuing 
bonds. Bonds help make panics. They create the disturb- 
ances from the change of interest rates. If corporations 
got their capital entirely from the sale of stock, they would 
have no trouble from high interest rates, for then would 
dividends also be high. 

By far the larger portion of debt consists of corporation 
bonds ; they pay no larger per cent, when there is prosperity, 
as they usually run for long periods. Companies do not 
wish to sell bonds for a long period at high rates, when hard 
times may reduce income in a short time. Hence we see the 
great railroads and industries trying to get capital by over- 
loading banks with short-time notes, thereby tempting fate 
and panic. Corporations could at all times sell their stock 
to make extensions or betterments, if they owed no bonds 
and were free from clique manipulation. If they were free 



INDUSTRIAL CORPORATIONS 307 

from debt they could continue a large degree of operations 
during the most depressing times. 

Millions upon millions of bonds are issued in good times 
with no limit but the ability to sell them ; then as a matter of 
course when depression comes they cannot even get money 
to pay current expenses. An individual almost universally 
limits his debts to what he thinks he may safely pay. But a 
corporation having no personality has no personal liability. 
The stockholders in control often over-issue bonds, buying 
them at a few cents on the dollar for the sole purpose of fore- 
closure. Then they sell their stock, buy the bonds, and take 
the whole property under foreclosure, thus criminally de- 
priving the stockholders of their property. Not only that, 
but the great mountains of bonds are in times of depression 
the great incubus on industry. 

Private persons must go into debt. Business cannot be 
done without it, but it is not essential for corporations to go 
into debt. They may instead issue more stock. Stock is 
not a debt, but a direct partnership title. The State has a 
right to refuse to allow bond issues by corporations. The 
sole thing to be considered in granting corporation charters 
is the public's good. Any phase of their actions which is a 
public evil should be stopped. Bond issues are a great evil 
to the public in general and to the stockholders in particu- 
lar. The gigantic robbery of stockholders through the graft 
of cliques has lately been a revelation to the public. In one 
instance especially, a clique issued bonds to themselves away 
below par and immediately marketed them at several millions 
profit. These graft swindlers are of several types. There is 
the same clique controling two corporations, having little 
interest in one, and robbing it to enrich the other, where 
they are large owners. There is the holding of the stock of 
one corporation by another. This is so palpably unnecessary 
and such an infamous means to rob the stockholders, and es- 



308 RIGHT AND RICHES 

pecially the public, that legislators have no excuse for allow- 
ing it. 

But the crowning means of swindling is bonding and the 
resulting reorganization. A corporation should only be al- 
lowed to issue stock. Should its assets shrink, the law should 
provide that all stock should be surrendered and a smaller 
amount taken in exchange pro rata by each stockholder, in 
the same manner that increased issues are now alloted pro 
rata. By this means a quantity of stock could be taken from 
the stockholders and placed in the treasury to be sold to pay 
debts or acquire the new capital needed. There is no limit 
to the workings of this plan. A million-dollar corporation 
finding its assets shrunken to $600,000, and itself in need of 
$100,000 additional capital, could call for a surrender of 
50% of all stock. Four-fifths of this could be canceled and 
the remaining $100,000 turned into the treasury. It would 
now be worth par and could be sold to get the new capital. 
Corporations should be compelled to maintain their stock 
near par. What a travesty on honesty to allow such a cor- 
poration to issue on top of its $1,000,000 stock another mil- 
lion of bonds to be sold for perhaps $200,000, making a total 
outstanding capitalization of $2,000,000 and only $800,000 
real capital. No wonder Wall Street is rotten. 

Prohibit corporation bonds ; reduce stock to a par basis ; 
provide that it shall be transferred on a public record, as real 
estate is. Charge a small fee for each transfer, not enough 
to deter actual investors in bona fide industries from buy- 
ing, but enough to stop idle gambling. The corporations of 
the country are of vital concern to every citizen. It is very 
important that capital be available to output the abundant 
native wealth. Whatever increases the danger of investment 
obstructs production, makes the means of subsistence more 
difficult to obtain. 

But what is the need for unlimited transfer of stock, in 
volume equal to the total of listed stocks in short periods? 



INDUSTRIAL CORPORATIONS 309 

This does not promote the legitimate interests of corpora- 
tions, but only the interest of the stock gambler. The Stock 
Exchange is not an essential to corporations' real interests, 
any more than the infamous race track poolroom is of benefit 
to the live stock industry. 

When corporations, whether engaged in industry, pub- 
lic service or banking, assume such magnitude as to be vital 
to public interest, they should be declared semi-public and 
the public's interest should be asserted and represented by a 
reasonable number of members on the board of directors. 

If corporations were not loaded down with inflated issues 
on which the holders demand interest and dividends, they 
would not be compelled to cut wages or "lay off" employes 
with the slightest recession of business. If these issues were 
only allowed upon an exhibit in detail of their assets, the 
amount of growth in the value of franchises and monopo- 
lies would be disclosed. 

We cannot, with safety either to industry or to the very 
existence of our government, much longer defer corpora- 
tion reform. All industrial progress and government hon- 
esty depends on corporation integrity. 

Not the size, but the conduct of a corporation is what 
demands attention. Targe corporations are not essentially 
vicious, but when they are, they are capable of greater hairm. 
They are also capable of functions vital to Society, which 
only they can perform, until such time as our legislative and 
executive bodies become sufficiently educated and honorable 
to give us public ownership. 

Do not imagine chat because you own no corporate shares 
you have no interest in corporate matters. Your interest is 
scarcely less than though you were a chief stockholder. The 
wage earner's employment depends on the right conduct 
of corporations, as does the merchant's success, or even the 



310 RIGHT AND RICHES 

religionist's or reformer's progress. This becomes a more 
vital problem as business tends more and more to corporate 
form. 

Will the patriotism of our citizens be sufficient for its 
solution ? 



PART SEVEN 



Right Use and Plenteous Supply. 



Chapte^r I. Waste and Want. 

" 11. GovERNMENTAIv REFORM AND InDIVIDUAI. 

Opportunity. 



20- 




CHAPTER I. 

Wast^ and Want. 

"Seemeth it a small thing unto you to have eaten up 
the good pasture, but you must tread down with your 
feet? And to have drunk of the deep waters, dut ye 
must foul them with your feet? And as for my flock, 
they eat that which ye have trodden, and they drink 
that which ye have fouled with your feet." 

NUMEROUS school holds the theory that waste, 

by some subtle means, increases production. The 

theory is more than a subject for idle debate. It 

makes a virtue of the profligacy of the idle, which 

enslaves the industrious. 

It is not so simple a matter as it might at first seem, to 
combat these advocates of waste. They embrace the multi- 
tude, yet the number who perceive the scientific truth is rap- 
idly increasing. It is strange that intelligent people could 
ever hold to such an impossible theory. Yet it is common, 
though less so than formerly, to hear war advocated as pro- 
moting good times, to hear the liquor and tobacco traffics de- 
fended as helps to business activity. Persons apparently 
moral and honest will assert that the vicious and idle revel- 
ings of vulgar wealth help trade and commerce. The same 
school urges the appropriation of public funds for the most 
useless of projects, maintaining that labor is thereby em- 
ployed and business improved. 

From what inverted logic has such policy evolved? 
Partly by the blinding shortsightedness of greed. This sel- 
fish reasoning would welcome the grubbing out of orchards 
if it might profit from the wages of those thereby employed, 
regardless of the loss of future fruit ; or the burning of fields 

313 



314 RIGHT AND RICHES 

of cotton or elevators full of grain to enhance the prices. 
Persons powerful in the councils of state advocate the en- 
couragement of production with a view solely to the profit 
of industrial proprietors. 

What reasonable motive can there be for production but 
to provide a supply for wholesome needs ? Much, n!o doubt, 
is ennobling in the arts and avocations which produce. All 
nature abhors idleness. It is ever accompanied with degen- 
eracy. But effort and exertion, without rational purpose, 
are not far removed from the nature of idleness. 

One might suppose that these strenuous advocates of 
production, who care nothing for lack and distress, were 
moved by some exuberant flood of energy, which compelled 
them to '*do or die;" but instead they are impelled by the 
most sordid greed. It is not passion to create, but to get, 
that moves them. 

The normal inspiration to create is the desire to give, 
to bless, humanity. The ''pay" or profit is a secondary con- 
sideration for a noble effort. This will not at first seem true 
in practical experience ; yet who does not recognize the pre- 
cept as true that an employe who ''watches the clock" will 
never be promoted. Recompense — compensation subse- 
quently — is certainly due, but is the secondary, and not the 
primary impulse. The wheels of commerce would stand 
still if there were no other motive than greed. None should 
engage in any work seriously without having in mind the 
utility of the result. 

This school cares nothing for consumers. Who is hungry 
or naked is the least of their concerns. They are worried 
about retaining a market for some great grinding mill. The 
selfishness of such economists is the basis of their logic. 
Their school should be called "inverted economics." True 
economics seeks to find the underlying principles of com- 
merce, that thereby commerce may furnish abundance to all. 
Are thousands starving? The true school seeks the cause. 



WASTE AND WANT 315 

Are people freezing to death in the streets of New York, a 
city whose wealth is the wonder of the earth ? It asks what 
is out of gear. Those of the inverted school seek scarcity 
of what they produce that prices may be high. The ex- 
tremists of this school will go to any lengths to cause such 
scarcity. Their favorite method is a protective tariff. An- 
other is a high freight rate with a rebate. Trusts, combina- 
tions, graft and commercial slugging are among the methods 
of retarding output. 

Hon. Leslie M. Shaw, addressing 700 students in the 
Harvard Union, prophesied a gigantic international trade 
war for the twentieth century, a contest which in bitterness 
would surpass the awful battles that were fought out during 
the century just passed with bayonet and powder. Said he: 

"England, France and Germany have long been depend- 
ent upon their manufacturers for their national subsistence. 
We have long regarded ourselves as an agricultural nation, 
but at the present time we are manufacturing 5 per cent, more 
articles than we can consume, and our manufactures are in- 
creasing four times as fast as our agricultural pursuits. 
These figures plainly show that before long we, too, will have 
to be dependent upon a foreign market in order to support 
our manufacturers. We must have this market if we are to 
exist. So must England, Germany and France. The con- 
flict will be an awful one. God grant that it may be blood- 
less." 

But why in the name of reason should we wish our man- 
ufacturers supported when we no longer need their wares? 
And would not a normal infant ask why we should wish to 
send away our products except to procure the many things 
we desire, and to supply those who lack. 

One of the priests of this creed was quoted in a recent 
publication as being in great apprehension because Japan is 
colonizing Manchuria with wheat raisers, and Korea with 
cotton growers. 



316 RIGHT AND RICHES 

Dreadful calamity to contemplate! Awful, cruel, bar- 
baric Japan to undertake to feed and clothe her people! 
''But," says this priest, ''it will rob America of her market 
in Asia for wheat and cotton." The same journal told of 
the freezing of poorly clad Americans. 

Contrast such economics with the desire of a true econo- 
mist to irrigate a new State, or to drain and put a sea wall 
about the Mississippi Delta, that our food and clothing sup- 
ply may be increased. It may be safely said that America 
never raises enough cotton to plentifully clothe even her 
own people. Perhaps some day she shall, but never shall 
she be burdened by a single bale too much. 

The following editorial from the St. Louis Post-Dispatch 
is logical : 

"The Booklovers' Magazine for April published an article 
by Harold Bolce in which he took great pains to show that we 
have but a trifling share of the trade of South America, the 
Orient and Oceanica. The facts presented by Mr. Bolce are in- 
disputable, but the inference he appears to draw that our 
manufacturers show lack of energy is entirely unwarranted. 
Mr. Bolce, like a great many other critics of the industrial 
situation, appears to be unable to grasp the idea that it is a 
big job to cope with the demands of a country growing as 
rapidly as the United States. When our manufacturers accom- 
plish that successfully, they achieve infinitely greater results 
than those of any other nation. Mr. Bolce should not lose 
sight of the fact that the value of the output of American 
factories exceeds that of its three greatest rivals. We ought 
to felicitate ourselves, that we not only manufacture more, but 
consume more, than any other people on the globe." 

Satisfaction is the ultimate of trade. Foreign trade that 
is natural is good. It gets nations acquainted and promotes 
good feeling. It is right for government agents to investi- 
gate foreign fields and report the situation. 

Various industrial associations might dO' well to have 
agents touring our own States to educate users and report 
needs. Home trade is what counts in productive volume. 



WASTE AND WANT 317 

Think what interest is felt about Chinese trade. Some advo- 
cate the expenditure of milHons of money, and men too if 
need be, to get it ; while the others are in dread lest they shall 
produce what we wish to sell. 

A daily paper remarks : 

"The Pacific Coast views with alarm an alleged boycott 
by Chinese merchants against American goods. So long 
as Chinese immigrants are barred here," the tale of horrors 
runs, "so long will the Celestial merchant prince taboo our 
wares." 

Terrible if true! China bought from us in 1904 $12,862,- 
000 worth of goods, almost exactly 3 cents' worth for each of 
her population. There is in Europe a little country smaller than 
Texas, 19 times smaller than China, that bought of us in the 
same year $213,723,000 worth of goods, or $3.85 per person. 
That country is the German Empire. 

A Chinaman at home patronizes Uncle Sam's shop to the 
enormous extent of 3 cents. Every German spends in it nearly 
$4.00 a year. Yet we are pouring out money by the hundreds 
of millions for power and prestige on the Pacific, with fatuous 
eyes fixed on "the future trade of the Orient," and don't even 
take the trouble to frame a reciprocity treaty when our present 
trade with Germany is threatened with serious diminution. 
Was ever commerce with such folly sought — or shunned?" 

This paper might further have asked, How much does 
the average American patronize Uncle Sam's shops? 

The best basis of business, either individual or national, 
is to provide those things that shall well and truly supply 
wholesome needs, and take little thought of markets. 

The following is a most sensible and broadminded view 
of the future of Pacific trade : 

"As industry develops — ^when Japan and even China be- 
come really great manufacturing countries in the modern sense, 
and especially when the great natural resources of China 
begin to be developed and the habits and wants of the people 
become more numerous and complex, as the habits and wants 
of all peoples do in proportion to the development of their 
industrial life — a trade will grow up across the Pacific ana- 
logous to the trade that now goes back and forth across the 



318 RIGHT AND RICHES 

Atlantic. Our best customers now are those nations that are 
furthest advanced in industry — England, Germany and France. 
This great law of commerce will not be changed because 
the Japanese and the Chinese now have cheap labor. If 
Japan proves equal to her great industrial opportunity, as she 
proved equal to her military necessity, the whole world will 
profit by the development that she will set going." 

A narrow view in one's personal affairs might be ex- 
pected, but for those posing as statesmen to advocate re- 
striction of production and wasteful methods is Httle less 
than criminal. 

IndividuaHstic selfishness that takes no cognizance of the 
interest of others, nor of the intelligent self-interest result- 
ing from the general welfare, sees no difference between 
being employed, to build, plant, develop ; or to devastate and 
destroy. But there is a widespread cause for this false 
reasoning. It is based on the universal economic slavery 
of the masses to those who govern the means of production 
— the natural materials of which wealth is made. 

But greed forges its own chains. Its only view is that 
of the chance to be employed. The chance to use some of 
the wealth that arises from these natural stores or sources, 
by getting it as wages. They care not whether their work 
may produce or destroy so long as wages are paid. Does 
the worker in the distillery or brewery think of the ruin his 
productions are causing? 

On the other hand, the employing class have, under this 
abnormal situation, come to regard themselves as the bene- 
factors of those they employ, holding the employed as under 
obligations to their employer, instead of the employer being 
lucky to have someone to relieve him of his task. 

A dear good lady in telling of the difficulty of getting 
washing done in a certain place, said she finally found an old 
colored lady who said she was very busy but would "try by 
working late into the night" to accommodate her next day. 
Whereat this good lady became indignant and told the col- 



WASTE AND WANT 319 

ored lady she did not wish to be "accommodated," that she 
wished to pay. Her friend to whom she was talking took 
her to task and asked by what logic she thought it other 
than an accommodation to have the woman go to such extra 
pains to do her work. We do not resent a bank's "accom- 
modating" us, even though we pay interest and our security 
is good. 

A foolish justification of waste is that it puts money in 
circulation. "Wait until he is dead, his boys will put his 
money in circulation" is a common remark. Now it is quite 
true that many men of means are too cautious of investing 
in progressive things, but it is not true that rich men keep 
a quantity of currency idle. They often do great injury by 
keeping resources idle. 

"The money is not wasted" is a common expression. It 
is as though one should watch a child with a cup dip up 
cream from a vessel and pour it into the sewer, and should 
say, "Oh, the cup is not wasted." 

Money is only a cup to dip and measure wealth. 

A man of great prominence expressed himself in one of 
the magazines that the heirs soon diffuse the estate among 
the community. As well might we say a conflagration dif- 
fuses the wealth consumed among the people of the com- 
munity. How foolish! When $1,000 is spent foolishly it 
is not in the slightest a question of money. That much value 
is annihilated. Rich people spend little currency; haz/e very 
little compared to their expenditures. They spend credit 
and redeem it with property. A fortune spent wastefully 
is a fortune lost to the whole world. Some may profit by 
easy bargains with such heirs, but such bargains are mere 
incidents ; while a carefully managed estate is likely to be a 
source of continuous benefit to the whole community. 

There is no benefit in the mere process of money circula- 
tion. Money circulation usually accompanies, arises from, 
exchange; but exchange may, or may not, be part of the 



320 RIGHT AND RICHES 

process of wealth production. A race track is a place where 
much money changes hands. Yet it often results in the 
failure of many useful business enterprises through money 
lost there. Certainly the whole expense of maintaining a 
race track is a total loss ; besides there is the loss of time of 
all patrons. 

The function performed by money is perhaps the most 
misunderstood of all the things with which man comes in 
constant contact. These confused theories constitute money- 
spending a creator of wealth, even when its effects are the 
worst form of wealth destruction and waste of labor. 

Wealth is a stream supplied by production and exhausted 
by expenditure. Little accumulates. Of the year's produc- 
tion but a fraction remains at the end of the year. Its ex- 
penditure is divided between reproductive capital and ulti- 
mate consumption. Consumption embraces normal use and 
lavish waste. Production promptly responds to the class of 
consumption by replenishing the various kinds of commo- 
dities in proportion to their exhaustion ; hence consumption 
determines the character of production. An overconsump- 
tion of luxuries tends to an underproduction of essentials. 
This power of directing industry is exercised not alone by 
the ownership and superintendence of factories, fields or 
mines, but by simple money-spending. How the owners of 
a large income are in a position of power is well illustrated 
by one having sole direction of a supply of water. Such a 
person might, by the opening or closing of sluices, turn all 
the water to the turbine wheel to produce electricity, or to 
pleasure grounds and parks, to please the whim of some 
Croesus, leaving millions of people perishing for water to 
drink. Or by properly seeing and doing his duty he could 
so distribute the precious resource in his charge as to give 
ample supply for necessity and reasonable pleasure. 

Does not the buyer of shoes direct labor and capital to 
making shoes ; the buyer of horses to the growing of horses ; 



■ WASTE AND WANT 321 

the buyer of beer to the making of beer, and of bread to the 
making of bread? Ships make travel and travel makes 
ships. To use the eloquent words of Ruskin, "For you who 
have it (riches or property) in your hands are in reality the 
pilots of the power and effort of the State. It is entrusted 
to you as an authority for good or evil, just as completely 
as kingly authority was ever given to a prince, or military 
command to a captain." 

But this grand man did not perceive the limitations of 
industry; for economic science was yet young in his day. 
Hence, the error of the further statement he makes. "And 
according to the quantity of it (wealth) that you have in 
your hands you are the arbiters of the whole issue. Whether 
the work of the State shall suffice for the State or not de- 
pends upon you." 

Many think that industry depends on the capital of the 
rich, instead of seeing that it depends upon the permission 
of those who dominate natural resources. To think that the 
liberal patronage of an industry by the rich, the spending 
of money for luxuries and service, adds to the total employ- 
ment of labor and capital is an error not to be wondered at. 
This patronage certainly employs those directly concerned 
and makes the industries patronized more prosperous, as we 
have just pointed out, but it does so at the expense of other 
industries. 

Goldsmith, inspired poet of economics, had a clear con- 
ception of this truth and plead with the people of his day in 
these sublime lines : 

"Ye friends of truth, ye statesmen who survey 
The rich man's joys increase, the poor's decay 
'Tis yours to judge, how wide the limits stand 
Between a splendid and a happy land. 
Proud swells the tide with loads of freighted ore, 
And shouting folly hails them from the shore. 
Yet count our gains, this wealth is but a name 
That leaves the useful products still the same 
Not so the loss." 



333 RIGHT AND RICHES 

In other words, be not carried away by the delusion that 
a large foreign trade, that high prices for land, high rents 
and rates, much building of mansions and skyscrapers mean 
plenty. *'Yet count our gains," sit down and figure, ''This 
wealth is but a name." ''Not so our loss." It is but too 
real. Visit the tenements of the poor. See who is deprived 
to provide these things. Look for the corning panic, the 
paralysis that must inevitably follow this unhealthy trade. 

The beneficiaries of privilege are skillful at misrepresen- 
tation, as Ruskin says, "By concealing its own fatality under 
aspects of mercantile complication and expediency, and giv- 
ing rise to multitudes of false theories based on a mean be- 
lief in narrow and immediate appearances of good done here 
and there by things which have the universal and everlasting 
nature of evil." 

In a previous chapter I have pointed out the conditions 
that place the final limit on output. Output as a whole is 
not limited by lack of capital, nor is employment of labor 
limited by such lack, but even were it so limited, spending 
money for luxuries is not applying it as capital. Output is 
limited by preclusion of resources, to a point below the min- 
imum "wage margin," that is, by holders of concession hold- 
ing out for a share of the output that leaves producers less 
than they will continue working for. 

Of course, all holders of concession do not hold out for 
an excessive share, nor do all producers decline to produce 
but at the margin this thing is done. A price is asked for 
lots that builders or users refuse to pay; railroad rates are 
so high that a certain product cannot be produced and pay 
them; excessive rents cause merchants and farmers to fail, 
so output is limited at the base. 

When concession holders raise their demands so that 
there is not left of the product enough for the standard min- 
imum of wages and interest, production declines. This re- 
bellion is begun by capital, rather than labor. Owners of 



WASTE AND WANT 323 

capital say, "I can see no profit to be made by me, after 
paying such rent or rates. I shall sell my stock and quit*;" 
or they refuse to begin new propositions. This is the limi- 
tation of the basis of industry, this establishes the extent of 
production ; establishes how much grain is grown, how much 
ore is mined; determines the volume of the output at its 
source. 

Now, to divert a large percentage of this determined vol- 
ume of grain, cotton or ore to purposes of waste, tends to 
enhance the cost of the share needed for essentials. The 
Czar of Russia wisely forbids the export of grain, to min- 
imize the extent of famine, even though he does little else 
that shows any economic wisdom. By the same reasoning 
the lumber, cotton or food products wasted, increase the dis- 
tress of the poor. Goldsmith puts it, 

"Around the world each needful product flies 
For all the luxuries the world supplies." 

So the rich whose income is from grain and whose con- 
sumption of it for food is a minor part of their personal ex- 
penditures, wish to have it high priced so it may purchase, 
when exported, much silk or wine or diamonds. But the 
comfort of the masses demands abundant and cheap food 
products. 

Of course, in an Intelligent consideration of this matter of 
vulgar waste, the question is not whether it is better for the 
rich to get their income and bury it, or to expend it for per- 
sonal luxuries. That might be debatable, but there is little 
tendency for them to do this. Any normal person with an 
annual income of a million, will either invest it again in in- 
dustry, or in lands, franchises, etc., with a prospect of in- 
creased value, or in personal luxury. It is so uncommon as 
not to be worth considering for them to habitually turn it 
into cash and lock it in a vault, or to take it in the form of 
grain or ore or lumber and store 'it away indefinitely. The 



324 RIGHT AND RICHES 

question then is between spending in wasteful luxury or re- 
irivestment. 

Now, what are some of the things bought for personal 
luxury? It is a pretty poetical theory that the "ladies and 
gentlemen bountiful" go into the highways and hedges and 
hire the poor and destitute to provide these luxuries, but can 
such employes make extravagant gowns or autos, build man- 
sions or do high-class catering ? No. The rich buy the out- 
put from the best in labor as well as materials. But there 
is a phase of this luxury that Goldsmith saw, even in his 
time, and it grows worse each year : 

"The man of wealth and pride 
Takes up a space that many poor supplied; 
Space for his lake, his parks' extended bounds; 
Space for his horses, equipage and hounds; 
The robe that wraps his limbs in silken cloth, 
Has robbed the neighboring fields of half their growth." 

The largest item of extravagance is in land and its basic 
outputs. Now in this last is where the great error is made. 
The employment of labor and capital, the sum total of its 
output or product, is not dependent on the owners of Wealth 
(real Wealth as defined in economics) nor on the spending 
of money, but on the margin of opportunity which is left 
open to producers. This is determined by the standard of 
wages and interests, which producers demand and are able 
to enforce. This law determines the total of the volume of 
output, even as the capacity of the sources of water supply 
determine how much is available in a district. Mere spend- 
ing of money with its resultant employment of labor to main- 
tain the supply of such things as are bought, does not in- 
crease the sum total of output. 

But spenders of money — final purchasers of finished 
product — consumers, determine in what proportion to 
each other various classes of products shall be made. 
To use the words of Ruskin again, "By the way we 



WASTE AND WANT 325 

spend it (money or wealth) we entirely direct the labor 
of these people during a given time." Or more cor- 
rectly, we direct the application or proportion applied to 
each of various lines, of an otherwise determined volume of 
producing capacity, limited as we have seen by the laws of 
wages and Preclusion. Continuing he says, "We become 
masters or mistresses and compel them to produce within 
certain periods a certain article. Now that article may be 
a useful and lasting one, or it may be a useless and perish- 
able one— it may be useful to the whole community or use- 
ful only to ourselves. And our selfishness and folly or our 
virtue and prudence are shown, not by our spending money, 
but by our spending it for the wrong or the right thing, and 
we are wise and kind; not in maintaining a certain number 
of people for a given period, but only in requiring them to 
produce during that period the kind of things which shall 
be useful to society, instead of those which are only useful 
to ourselves." 

Our Sunday papers a while ago gave us a story of a 
New York millionaire's daughter who considered herself a 
great benefactress because she expended $100,000 annually 
in dress. She boasted of working 1,000 women making her 
gowns. Think of it, one thousand women, toiling, strug- 
gling in pent-up tenements ; their babies neglected and their 
own household duties left undone, all to provide clothes for 
the back of one useless, idle woman ! Yet she asks : "What 
can I do better with my money?" 

Indeed, what can a vain, . thoughtless, idle woman do 
with half a million or more a year ? It is indeed a problem. 
But no harder to answer than the question, "What right 
has a vain, idle, thoughtless woman to have so much wealth 
come into her hands each year ?" Let not the reader think 
that the expenditure of money is hereby condemned. Wealth 
is only for use. But one should distinguish what is the best 



326 RIGHT AND RICHES 

use, and should not be blinded by false theories when making 
such distinction. Ruskin says : 

"I don't say you ought not sometimes to think of your- 
selves — only do not confuse Vanity' with benevolence nor 
cheat yourselves into thinking that all your finery is so much 
put into the hungry mouths of those beneath you ; it is not 
so; it is what you yourselves, whether you will or no, must 
sometimes instinctively feel it to be, that so much has been 
taken out of their mouths." 

If we perceive the scientific fact, demonstrated in the 
chapter "The Domain of Use," that the whole volume of the 
output of wealth is fixed by the extent of such Domain; 
that the supply of capital put into industry is always as 
much as these ''rates" will allow to have a reasonable in- 
crease; and that currency circulates in response to the 
volume of output, then we may clearly see that whatever 
absorbs part of this determined output, without satisfy- 
ing wholesome need, must inevitably cause some to suffer 
lack. It is simply a proposition of subtraction. What, then, 
is the distinction between a proper use of one's income and 
the dissipation of it in criminal extravagance? It is largely 
to be decided by one's own conscience, but a little considera- 
tion may help to an intelligent decision. Epictetus said : 

"What you avoid suffering, do not attempt to make 
others suffer. You avoid slavery; take care that others are 
not your slaves. For if you endure to have a slave, you ap- 
pear to be a slave yourself first. For vice has no community 
with virtue, nor freedom with slavery." 

The first question to decide is what moral right we 
have in the income which the "rules of the game of trade" 
have thrown into our possession, for legal title is not essen- 
tially moral title. A certain person when asked to pay a 
debt, said that the statute of limitations had relieved him of 
liability for it. He was told that there was no statute which 
hindered one from discharging an honest debt. Just so, there 



WASTE AND WANT 327 

is no law to prevent one from rectifying the receipt of gains, 
which are legal, but unmerited. 

First then, we should study the source of our income, 
whether it be just; does it come from excessive charges? 
Does it come from hindering instead of promoting industry ? 
Then we should be careful to discriminate in expenditures 
for our personal satisfaction, between what is really excel- 
lent and what is merely display ; between what has real art- 
istic merit and dignity of form and color, and what simply 
has the form of the dollar mark, and the glitter of gold. 

It is said by a critic of architecture that the mansions 
of the Russians excel the modern mansions of any other 
land, in both their size and the extravagance of their inter- 
iors. Is not this fact consistent with the universal motive 
of extravagance? In proportion to the depressing and en- 
slaving methods by which income is wrung from toilers, such 
is the extent of its flaunting in the faces of those who are 
oppressed. This taunting impudence reached its limit when 
the French Revolution burst forth to rebuke it. 

"O, luxury! thou curst by Heaven's decree, 

How do thy potions, with insidious joy, 
Diffuse their pleasures only to destroy! 

Kingdoms by thee, to sickly greatness grown, 
Boast of a florid vigor not their own: 

At every draught more large and large they grow, 
A bloated mass of rank unwieldy woe; 

Till, sapped their strength, and every part unsound, 
Down, down they sink, and spread a ruin round." 

— Goldsmith. 

To accumulate wealth, to be surrounded by what is ex- 
cellent in architecture and art is commendable ; but first look 
to the moral rightness of your revenues, and even though it 
be beyond criticism, do not think that you have still no obli- 
gation to society in its expenditure; this wealth is only rela- 
tively yours. 

21— 



g28 RIGHT AND RICHES 

How can you best meet this obligation? That is your 
problem. To give it away to the individual poor is not al- 
ways well. Your business may offer the best opportunity. 
Do you own lands, or franchised industries? Perhaps you 
can serve your fellow-man best by using your wealth to pro- 
mote the greatest possible output therefrom in quality and 
quantity. Or by developing the highest standards of excel- 
lence in the sanitary, moral and intellectual condition of your 
employes, which may be done by a reasonable investment of 
your wealth. If your income is from tenements, do the ten- 
ants get all that is due them ? He who has the right motive 
need not be long in finding investments in philanthropy 
which will not only not exhaust themselves, but which will 
increase in their usefulness as time goes on. Mr. Spreckels 
of San Francisco has made one of the grandest of such in- 
vestments in furnishing funds to prosecute graft. 

To broaden the field of effort by drainage and reclama- 
tion; to support efforts to divert population from big cities 
to small ones through better surroundings, thus remedying 
the awful results of the greed which entices them to such 
cities, are suggestions for such use. 

Whatever conserves natural resources for the best and 
largest use, whatever extends the range of their utility, 
broadens the field of output and blesses all. 

Every laborer should take an interest in the greatest de- 
velopment of our natural resources and the protection of 
them from waste. Timber, mineral and water reserves 
should be regarded as his capital. Irrigation, drainage and 
reclamation benefit all. Waste of public funds is his injury. 
The eradication of graft is labor's only hope. Such waste 
as intemperance in intoxicants or extravagance of any sort 
is an injury to labor. Why? Because there is just one pair 
of hands to feed each mouth if all work. 

When the extravagance of the rich is condemned by the 
poor it will soon be corrected. Do not the large majority 



WASTE AND WANT 329 

of the poor covet wealth for the same purpose? They need 
to learn the true spirit of ownership as much as the rich. 
They have it in their power to direct by their votes the ex- 
penditure of public revenues. They should appreciate this 
responsibility. This one effort on their part would soon 
ameliorate the worst distress. The sums now expended on 
navies would open up vast resources if spent on good roads, 
or deep waterways, or railroads, or drainage. The land and 
mineral resources the Federal Government allows to be 
stolen would, if saved, yield revenues to transform our land. 
Many think that the employment of labor on wasteful 
production and extravagance is good for wages. Do you 
not know that the million dollar yacht and the locomotive 
to bring you coal cannot be built with the same labor or 
material ? 

Now, if the work of a larger percentage of laborers is 
diverted to serving the very rich and the very wasteful, it 
must leave the number so much lessened, who provide the 
food, clothing, etc., needed by the common people. 

Hence, by the law of supply and demand, it is enhanced 
in price, is harder to get. Suppose that a wealthy class con- 
stituting but one per cent, of the people should hire ten per- 
sonal servants each. That would be twenty per cent, of all 
the labor. Then suppose that they should consume 50 per 
cent, of the goods produced. This would leave for 99 per 
cent, of the people the product of less than 40 per cent, of 
all workers, while this one per cent, consume the service of 
60 per cent. Do you suppose that the common people could 
live as well? Two evils will surely result, long hours of 
labor and short rations to the common people. 

Is it any of your business what another consumes? In- 
deed yes. It is the duty of every worker especially to look 
with disfavor on an increase of the ranks of personal serv- 
ants. An increase of luxuries may come from an increase 
of scientific knowledge, but an increase of the number in 



330 RIGHT AND RICHES 

servitude means a decrease of the free labor wherewith to 
supply our needs. What is the trouble now in this country? 
Immeasurable increase of output is accompanied by slight 
increase of supplies to the masses. 

Where output has been multiplied by ten, use by the 
masses has perhaps not increased half. Where does the 
other more than eight-tenths of the increase go to? It is 
said by the press that the one room occupied by one of our 
millionaire's daughters married to a foreign title, cost about 
a million dollars in decorations and furnishings ; that her 
servants were a small army of skilled men and women. 

How many mansions are being built that cannot be cared 
for by less than ten or a dozen servants? What is that to 
us? Simply that it decreases the number engaged in pro- 
duction of those things needed by all, causing corresponding 
increase of price. Also it increases the probability that our 
children shall be servants. For remember that servants are 
not made of wood or iron, but consist of men and women. 
There is too much seeking of wealth from sordid motives. 

We must learn the true consistence of zvealth and that 
its enjoyment is not through the domination of others but 
through its wholesome diffusion. How many, after strenu- 
ously acquiring a profusion of property fail to enjoy it as 
they had expected they should. 

''The ground of a certain rich man brought forth plen- 
tifully and he said 'i^ * * I will tear down my barns and 
build greater and there will I bestow my fruits and my 
goods, and I will say unto my soul (sensuous desires) : 'Soul, 
thou hast much goods laid up for many years ; take thine 
ease, eat, drink, and be merry.' But God said unto him, 
'Thou fool, this night thy soul (sensuous appetite or desire) 
shall be required of thee.' " "What shall a man give in ex- 
change for his soul?" How can one buy the appetite to get 
pleasure out of things which no longer please ? 



WASTE AND WANT 331 

Why do those becoming rich often find no pleasure in 
any of the things they had in view when striving for their 
riches ? Because their motives were wrong while they were 
accumulating such things. Truly, "a man's life consisteth 
not in the abundance of his possessions." 

But ''the slothful man is brother to him that wasteth." 

The effect of this law does not depend on the quantity of 
wealth but how it is used. He who had one talent which he 
devoted entirely to self was condemned, while he who had 
five and put them out at interest, or useful service, was 
blessed with larger means of usefulness. It is the duty of 
those possessed of much property to devote it and the op- 
portunities thereby afforded to the service of humanity, and 
it is no less the duty of those without property to devote 
their efforts to unselfish service, and such devotion is usual- 
ly rewarded with increasing supply of wealth. 




CHAPTER 11. 

Govi:rnme:ntai. Re:form and Individuai, Opportunity. 

''And the government shall he upon his shoulders: 
Of the increase of his government and peace there 
shall he no end.'' — Isaiah. 

"And a King shall reign and prosper and shaU 
execute judgment and justice in the earth * * * and 
this shall he His name wherehy he shall he called The 
Lord Oue Righteousness." — Jeremiah. 

NE of the disciples on the way to Emmaus after 
Jesus' crucifixion despondently declared: "But we 
trusted that it had been He which should have re- 
deemed Israel." The Jews, even the disciples, 
misunderstanding prophecy, expected Jesus to redeem them 
from the Roman power. Just before his ascension they 
asked Him : "Wilt thou at this time restore again the King- 
dom to Israel?" 

People commonly expect all reform to be brought by some 
"man on horseback," dealing destruction to those whom they 
think to be their oppressors. Jesus strove to remove this 
mistake from his hearers' minds by telling them "The King- 
dom of Heaven cometh not with observation," "The King- 
dom of Heaven is within you." "We wrestle not with flesh 
and blood, but with the powers of darkness." 

Reforms come not down from organized authority, but 
proceed from the improvement of the dominant thought of 
the people up to the constituted authority. As Markham 
sublimely voices it, 

"Nay for He comes to loosen and unbind, 
To build the lofty purpose in the mind." 

Then what object does it serve to learn the principles of 
economics? Does it do any good for people to learn how 

332 



GOVERNMENT AND OPPORTUNITY 333 

they are being deprived of the results of their labor? How 
their public officers are misrepresenting them? That courts 
are prejudiced by predatory interests? 

It does much good; for error subjected to the light is 
powerless and truth understood will prevail. A public opin- 
ion based on science, on a knowledge of the truth, will cor- 
rect public errors. 

Is the inauguration of such reforms as Public Owner- 
ship, Initiative and Referendum, etc., essential to the cor- 
rection of public abuses? 

Yes and no. They are important because they represent 
the crystallization of the better thought, but statutory en- 
actments are not the goal of reform movements. Statutes 
depend for their effectiveness upon the people, upon having 
the eternal laws of truth "written in the people's hearts;" 
upon an understanding of what is right, and why it is right. 
True popular government guaranteeing liberty and justice 
is attainable only through the self-government of the indi- 
vidual citizen and he may only succeed in goj^rerning himself 
by the apprehension and demonstration of the absolutely 
scientific divine principle of government, the "royal law of 
liberty." Enslavement is proportionate to the ignorance and 
selfishness and indifference of the enslaved, regarding their 
rights. 

All law is fulfilled in one word: "Thou shalt love thy 
neighbor as thyself.*' 

The conception of government as something far away 
is happily beginning to give way to a truer conception. We 
must cease to speak of government in the third person ; gov- 
ernment is "we" — not "they." The following extract from 
a recently recovered ancient manuscript, is said to be the 
words of Jesus : "Strive therefore to know yourselves and 
ye shall be aware that ye are the sons of the Father, and ye 
shall know that ye are in the City of God and that ye are 
the city." The "city" was the common ancient expression 



334 . RIGHT AND RICHES 

for organized society. It is beginning to be recognized that 
the foundation of a city's prosperity is righteousness and not 
dissoluteness. 

Government is not now so generally thought to consist 
in fort and navy, in policeman's club and grated cell, as for- 
merly. This is evidenced by the advance of prison reform, 
juvenile courts, paroles of prisoners, , and other methods 
which began with the great step of abolition of debtors' 
prisons. A police court in Chicago is giving a good demon- 
stration of the superiority of "common sense" — true sense — 
over stereotyped foolishness in dealing with the violators of 
the law. This judge reasons with the delinquent ones as 
man to man ; appeals to the good in them, points out the re- 
sults of their mistaken conduct irrespective of statutes, and 
with splendid results. 

I hope to see the day that no disagreement regarding 
property or service can come to a farce comedy court trial, 
until efforts to agree on the real truth shall have been ex- 
hausted, until after both parties to the contention shall have 
submitted in writing his full sworn statement of facts to the 
arbitration of three of their fellow citizens, with only the 
principals present, and without witnesses or lawyers. How 
little the law has to do with such matters as an agent's claim 
for commission, an employe's claim for wages, an ordinary 
claim for damages to property, or a debt for the price of 
property. These matters almost solely rest on reason, and 
to becloud them with great volumes of legal opinions is in 
itself a crime. 

No better statement of government can be made than that 
by Ruskin. "Government is always twofold * * * visible 
and invisible. The visible government is that which nomin- 
ally carries on the national business; determines its foreign 
relations, raises taxes, levies soldiers, fights battles or di- 
rects that they be fought, and otherwise becomes the ex- 
ponent of the national fortune. The invisible government 



GOVERNMENT AND OPPORTUNITY 335 

is that exercised by all energetic and intelligent men, each 
in his sphere, regulating the inner will and secret ways of 
the people, essentially forming its character, and preparing 
its fate." 

If property owners make the laws and influence the 
courts and the press, does not this statement conflict with 
the one that public opinion is all-powerful? No. It con- 
firms it. This predatory class but represents or embodies the 
thought of the community. The public is plundered by their 
schemes of greed only to the extent of the public's greed. 
It is greed in the majority which tolerates oppressive greed 
in the few. St. Paul says : "But if ye bite and devour take 
heed that ye be not consumed one of another." Greed can- 
not combat greed. 

Statutory law, with its whole machinery of courts, law- 
yers and common law farces, is all a poor substitute for the 
power of a public opinion founded on righteousness. We do 
not depend on statutes to-day to prevent chattel slavery. 
Emerson tritely expresses it, "The law is only a memor- 
andum." 

"Evil is not power." When, for love of mankind and 
love of God, the light of truth is thrown upon what are sup- 
posed to be the impregnable fortresses of evil — as evil com- 
binations of capital, grafting, political corruption, all forms 
of greed — these herds of swinish forces are seen to "rush 
violently down a steep place." Have we not seen the rush 
of corruptionists to panic and suicide in the last few years ? 
"Evil is not power." The emancipation of mankind does 
not depend on human legislation. It must be first in the 
hearts of the people to get such laws, and afterward to make 
them eflfective. 

A knowledge am.ong the people of the economics Jesus 
taught, is a better guarantee of peace than navies and forts ; 
a better guarantee of justice than much legislation ; a better 



336 RIGHT AND RICHES 

guarantee of the safety of property and person than im- 
mense prisons and police forces. 

Seventeen men who put aside selfishness reformed Gal- 
veston. One man with honest patriotic effort started the 
reform in Missouri. Intelligent patriotism, civics, philan- 
thropy, even true religion depends on a knowledge of the 
science of economics, for economics is one of the two phases 
of religion ; that of our duty to our fellw nian, "for he that 
loveth not his brother whom he hath seen, how can he love 
God whom he hath not seen?" 

Says Governor Folk of Missouri in his Thanksgiving 
Day Proclamation: 

"Let us encourage industry and attack not wealth. Let us 
fight not men but the evil men do. Let us love not money 
but manhood. Let us preserve inviolate the principle of popu- 
lar self-government; unite in enforcing the laws and counter- 
acting any attempt to defy them. Let us realize that liberty to 
make laws does not mean license to break them; that the 
liberty guaranteed us is liberty under the law, not liberty against 
the law. Let us not array class against class, but preserve the 
rights of all by causing each to respect the rights of the other. 
Let us appeal not to cunning but to conscience, and remember 
that by making the public conscience clean the public life is 
made clean." 

Hate does not promote liberty. Happiness and plenty 
are not guaranteed by material means, either by engines of 
destruction or construction. Says Marcus Aurelius, the wise 
pagan apostle of pure thought: "Look within, for within is 
the fountain of life, and it will ever bubble up if we will 
ever dig." When the Kingdom of Heaven is attained it will 
be from within. The icy barriers of greed which exclude 
humanity from its own, must be bombarded by wisdom and 
melted by love. Love is the opponent of aggression. Ac- 
cording to Emerson, "Love is the only opponent of prop- 
erty as we now have it." 

Says Dr. Washington Gladden in the Congregational ist : 



GOVERNMENT AND OPPORTUNITY 337 

"How great is the need of enkindling in the soul of the 
nation a great sense of the eternal realities — of the sacredness 
of truth, of the holiness of justice, of the nobility of service, 
of the divineness of humanity! O, can you not see — you states- 
men — you publicists — you political philosophers — that the one 
vital need of this nation, at this hour, is the presence in the 
hearts of the people of that friendliness for one another which 
is the soul of justice and the only bond that can hold men 
together in fruitful relations? To fill human society with this 
great friendliness — this is the business of the Christian Church. 
This is what we mean when we pray. 'Thy Kingdom come, 
Thy will be done on earth, as it is in Heaven.' " 

The comparative prosperity of tv^o peoples is commen- 
surate with the degree of their real Christian character, and 
is manifested in charitable and elevating works. The meas- 
ure of this true civilization is indicated by their treatment 
of woman. Have you never known a man to complain bit- 
terly of his poor fortunes or the long hours some enslaving 
employers compel their men to work, while yet he would 
himself sit idly by and compel his wife, whom he professed 
to love, to work fifteen hours a day for him and his children 
without raising a hand to help her? Is it to be wondered 
at that such men are poor? The more savage the man, the 
more his selfishness is manifested in overbearing force. Who 
gave man and not women the right to vote? One of our 
gi-eatest living statesmen has pointed out the excellence of 
Christian ideals over Oriental ideals, to be the infinite super- 
iority of Love, the vital force of Christianity, over reciproc- 
ity, the lifeless rule of the Oriental religion. Reciprocity 
does nothing without pay; Love thinks not of the pay but 
of the blessing it may impart and finds it "more blessed to 
give than receive." This is obvious in the more bountiful 
wealth of the Christian community, for is it not self-evident 
that giving adds to the sum of wealth while taking decreases 
it. In the degree that man discovers Love, God, he finds 
abundance, for ''God is all." Christian lands are free from 
famines, which almost depopulate un-Christian nations. 



338 RIGHT AND RICHES 

Are they who suffer from poverty, then, morally or men- 
tally inferior to those who enjoy affluence? This is not im- 
plied at all, for the grandest characters we know may be des- 
titute of property, while those of greatest possessions may 
exhibit the meanest dispositions. Yet notwithstanding these 
apparent inconsistencies, it remains an uncontrovertible 
truth that poverty is an unnatural and deplorable error that 
we should earnestly, carefully and prayerfully strive to over- 
come. But we should be sure that in this effort to overcome 
poverty we proceed from true principles. 

It is not enough that the pupil have the right answer 
attached to his methematical problem. He must have at- 
tained it by the correct principle, for him to truly benefit 
thereby. Likewise it is no conclusive proof of progress in 
the science of business that we get a quantity of property 
by indiscriminate means. It is essential to our ultimate good 
that our supply come as a result of the demonstration of 
right business principles. He who flatters himself on his 
wonderful progress in the knowledge of business may sadly 
need even the advice of his indigent brother, regarding the 
true solution of this great problem. ''He that seeth his 
brother have need" and has no compassion on him, has cer- 
tainly made little progress in the real science of success, no 
more has he who is unkind to his own family. 

It is important to have an accurate statement of the re- 
lations and laws of wealth and production. It is very im- 
portant to have legislation based on these natural and un- 
changing laws, but most of all to learn that "Love is the 
fulfilling of the law." Evolution of good government, of 
intelligent commerce, of all social progress is not the crea- 
tion of something new, but the recognition of principles that 
were ever operative. This is true of mechanics and industry, 
just as it is true of the so-called evolution of man. Steam, 
chemistry, and the principles of engineering are not new. 
Man was made perfect, in the image of God. The Prophet 



GOVERNMENT AND OPPORTUNITY 339 

Isaiah thousands of years ago saw a perfect social status 
based on right or righteousness. 

Considerable economic writing of late has been a vague 
presentation of a strange, mysterious god termed "social 
love," social evolution, whose "worship" is labor. These 
teachers point to the widening field of industry, the growing 
interdependence between people of the most remote corners 
of the earth. They also note the growing fraternity, peace and 
good will among men, and attribute them to the effects of 
this "social god," a god of blind energy expressed in work. 

To such teachers let us repeat the words uttered by Paul 
in that grand outburst of eloquence on Mars Hill : "Ye men 
of Athens, I see that in all things ye are too superstitious, 
for as I passed by and beheld your devotions 1 found an 
altar with this inscription, 'TO THE UNKNOWN GOD.' 
Whom therefore ye ignorantly worship, Him declare I unto 
you. God that made the world and all things therein, seeing 
that He is Lord of Heaven and earth, dwelleth not in tem- 
ples made with hands ; neither is worshiped with men's 
hands as though He needed anything, seeing He giveth to all 
life, and breath, and all things ; and hath made of one blood 
all nations of men." 

It is not extension of the field of exchange that is pro- 
moting the brotherhood of man; but it is the extension of 
brotherhood through the teachings of Him who came to 
bring "peace on earth" that is making exchange world-wide. 

Isaiah foresaw the time to come "that the mountains of 
the Lord's House shall be established in the top of the 
mountains, and shall be exalted above the hills; and all na- 
tions shall flow unto it. For out of Zion shall go forth the 
law and the word of the Lord from Jerusalem, and he shall 
judge among the nations and shall rebuke many peoples; 
and they shall beat their swords into plowshares, and their 
spears into pruning hooks, nation shall not life up sword 
against nation, neither shall they learn war any more." 



340 RIGHT AND RICHES 

The recognition of God as our Father makes us all one 
family ; it destroys race hatred and false national "interests." 

Love certainly prompts activity and useful effort, but 
there is no tendency in indiscriminate work to elevate the 
worker, rather a tendency in much of it to degrade. 

We must learn both what right is, and what riches are. 
Riches, wealth, is not simply tons or pounds of freight. The 
word wealth is from weal or well. Its primary meaning as 
given by the Century Dictionary is prosperity, well-being, joy 
and happiness. To confine the use of the word more to mater- 
ial wares is a later tendency. Wares are only wealth in the de- 
gree that they promote well-being. Wares of great value to 
one advanced in civilization would often times be of no use 
to one lower in the scale, and vice versa. Many philan- 
thropists have been discouraged because those whom they 
sought to help failed to use what was offered them. To a 
refined person, the lack of a bathroom in a house would 
seem a great privation, yet tenants have been known to use 
nice enameled bathtubs only as a storage for ashes. Wares 
are not happiness. Happiness is limited by them only ac- 
cording to our mental estimates. Some think tobacco and 
intoxicants wealth; many others think them what Ruskin 
terms "illth." 

Current economics tend too much to a material concep- 
tion of wealth. The conception of needful things as "prop- 
erty," an entity whose basis is hindrance to use, is the an- 
tithesis of the true idea of such things conveyed by the term 
"goods." "Goods" or "good" consists in the effectual ex- 
pression of a benign motive to minister to need. This is 
the ideal conception, this fulfills the golden rule: Whatso- 
ever ye would that men should do to you, do ye even so to 
them, for this is the law and the prophets. The common 
rule of property, which is directly antagonistic to this, might 
be rendered : Take ye all the traffic will bear, for this is the 
source of corruption and depression. How harmful these 



GOVERNMENT AND OPPORTUNITY 341 

inverted notions are appears in the dire effects of thinking 
money to consist of metal, in the tendency to give more at- 
tention to taxing useful commodities than privileges im- 
mensely more valuable, in the inordinate desire to acquire 
immense houses and fill them with cumbrous merchandise, 
in the savage taste of some rich women to have innumerable 
dresses at a cost of fabulous sums, and most of their time 
and thought. These unfortunate tendencies are shown by 
our cities in sacrificing all that make them fit for habitation, 
to blighting, smoking factories, and in licensing nuisances 
for money; in the poisoning envy and jealousy of many 
poor toward the prosperous. 

A message was recently sent 1,200 miles without paper, 
or ink, through air, instantly. Steam was always easily 
available, yet it was not always wealth. Where formerly it 
was thought essential that thousands of miles of unsightly 
fences, harboring obnoxious weeds, be built to protect farm- 
ers' crops, now a simple word of fraternity and intelligence 
expressed in a memorandum called law, protects those crops. 
Is not this intelligent word greater riches than the fences, 
that before had cost millions? Emerson says, "They only 
who build on ideals build for Eternity." Wealth arises not 
so much from muscular effort, or mechanical energy as from 
unselfish purpose to serve, to contribute. Production is 
more truly a discovering or revealing of riches than a cre- 
ation of them. "Every good gift * * * cometh down from 
the Father of lights." Poverty is darkness. 

Do not limit the success of your undertakings by the toil 
they involve, either as to your recompense or the good to be 
done. Success is not limited to the measure of the toil en- 
dured even from the ordinary commercial standpoint, for 
those who prosper greatest do not toil the hardest, nor does 
any moral law measure your reward by your toil but rather 
by the love you put into your work. Toil is necessitated by 
the number of our mistakes we must correct. Yet he who 



342 RIGHT AND RICHES 

labors not seldom makes much progress ; for we must "work 
out our own salvation." It takes work to root the errors 
out of our thought so that God may work through us. He 
who has the right motives in life finds little time for idle- 
ness. But the toil of many is like struggling to pump the 
water from an excavation without first shutting out the in- 
flow from the sea. 

We must not fail to do our work because conditions seem 
adverse. "He that observeth the winds shall not sow, and 
he that regardeth the clouds shall not reap." The success- 
ful man is one that continues to do his part regardless of 
good or bad times. "Cast thy bread upon the waters for 
thou shalt find it after many days." "In the morning sow 
thy seed and in the evening withhold not thine hand." Some 
persons never expect to have anything, perhaps because they 
work with the wrong motive. 

St. James writes : "Ye ask and receive not because ye ask 
amiss," for the purpose of consuming it in selfish indulgence. 

Jesus emphasized the importance of motives to our suc- 
cess in acomplishment when, teaching how to pray, and 
made His meaning unmistakable by the following illustra- 
tion : "Which of you shall have a friend and shall go unto 
him at midnight and say unto him : 'Friend, lend me three 
loaves, for a friend of mine in his journey is come to me 
and I have nothing to set before him.' " Continuing He 
points to the inevitable result of such an appeal ; that though 
he will not supply you because you are his friend yet be- 
cause of the worthy motive which prompts your seeking — 
the desire to minister to another's need — ^he will give you 
as much as you need. 

What great wealth would be secured to us if we could 
look to the purpose of our work rather than the pay. 
Wealth consists in thought and action. You cannot give 
"that which is holy unto the dogs, neither pearls to swine." 
Has not improved machinery been burned by those who 



GOVERNMENT AND OPPORTUNITY 343 

thought it harmful, and are not all progressive ideas resisted 
by communities and persons not yet ready for them? In- 
gratitude both to God and to man, for what we receive is 
the principal cause of poverty. 

Many are thought to be rich and think themselves ''rich 
and increased with goods" when they are "wretched and 
miserable and poor and blind and naked." Confidence, hon- 
esty and brotherliness are better than expensive courts to 
guarantee justice. Friendship and love between nations is 
better national wealth, than forts and navies. 

Nothing is more evident than that "a man's life con- 
sisteth not in the abundance of his possessions." 

It is remarkable how the beautiful, simple, scientifically 
economic teachings of Jesus and the scriptures have been 
misconstrued by professing Christians, and made to justify 
the most infamous industrial practices and to condemn the 
most worthy motives and acts in connection with the pro- 
curing of wealth ; and on the other hand how the economists 
of high motive and rational theories have condemned the 
Christian teachings as opposed to the welfare of the honest 
worker. Christianity and economics are inseparable; at- 
tempt to divorce them and you have neither. 

Religious teachers have persistently interpreted scrip- 
tural statements to condemn wealth as an evil per se; then 
again they have justified slavery thereby, and preached 
submission to every evil and oppression. The most plain 
and sacred promises in regard to God's providence and 
abundant supplies for all our needs, have been nullified 6y 
giving them a figurative meaning, while others have been 
narrowed from a broad meaning to one of narrow and mean 
import. The passage "It is more blessed to give than to 
receive," and "The Lord loveth a cheerful giver," are almost 
stripped of meaning when construed to imply only the con- 
tribution to church funds, or for that matter, when such 

22— 



3M RIGHT AND RICHES 

giving does not include the giving of kindly service which 
is possible to all. It is only necessary to read the beauti- 
ful precepts and principles stated by Jesus and His 
disciples, and the Prophet Isaiah particularly, and to take 
the meaning of their words given by Webster's Dictionary 
to have a most beautiful Science of Economics. Truly, 
much of the scriptures have a double meaning, as have all 
profound writings, but it is as wrong to rob them of their 
literal meanings, as of their scriptural. Take the word 
"bread;" sometimes spiritual strength is plainly implied, 
other times subsistence, or only food ; other times both spirit- 
ual and bodily subsistence is meant. 

In the 6th chapter of Matthew we have the grandest 
economic teaching ever given to poor, tired, worrying hu- 
manity: "Take no thought for your life what ye shall eat 
or what ye shall drink ; nor yet for your body what ye shall 
put on." There can be no question that literal subsistence is 
here meant; there is no double meaning nor any figurative 
meaning. He means just plainly what he says. Further on 
he says: "For your Father knoweth that ye have need of 
these things." It is as one might say to a little boy at his 
grandmother's : "Now, don't worry nor ask about when you 
are going to have dinner, or what you will have ; Grandma 
knows you haven't had your dinner." 

Is it not as plainly a violation of this command to be 
worried by poverty, by the lack of the wholesome instru- 
ments of harmonious activities as it is to be unduly strenu- 
ous to pile up wealth? We should no more let the lack of 
things dominate us than we should allow their possession to 
hinder the true purpose of life. 

Jesus had no accumulation of property. He had "not 
where to lay His head," yet he was not troubled by lack of 
a boat; He walked on the water; nor for lack of bread to 
feed the multitudes ; He, got the coin from the fish's mouth 
to pay the tax to Caesar which he declared to be unjust." 



GOVERNMENT AND OPPORTUNITY 345 

Then Jesus makes the one grand vital statement of all 
true economics : "Seek ye first the Kingdom of God and His 
righteousness and all these things shall be added unto you." 
Manifestly there is no meaning to this when we construe 
"seeking the Kingdom of God" to mean only a place to go to 
after we are dead, for how could food and clothing be added 
to our bodies after we are dead? This is not a bargain to 
"pay" food and clothing in return for believing something 
or doing something. It is rather a scientific proposition; 
just as a teacher would say to a pupil: "Take a base of 8, 
a perpendicular of 6, and a hypotenuse of 10, and you wilt 
have a perfect right angled triangle." Henry Drummond 
rightly teaches that the Kingdom of God is a kingdom of 
cause and effect. He says science must include the infallible 
spiritual laws. Right not simply secures riches. Right is 
riches, true riches, but not property. 

Because Jesus and His disciples refused to counsel the 
suppression of certain evils by violence, their words have 
been construed by some to justify such evils. Paul says : 
"Servants be obedient to your masters according to the flesh 
'•' * * not with eye service, as manpleasers, but as the serv- 
ants of Christ doing the will of God from the heart." This 
has been construed to uphold slavery, though nothing could 
be farther from the truth. When Jesus was asked to inter- 
fere in the settling of an estate by one who thought he was 
not getting his fair share. He asked : "Man, who made me 
a judge or a divider over you? And He said unto them 
take heed and beware of covetousness ; for a man's life con- 
sisteth not in the abundance of the things that he possesseth." 
While Jesus was the greatest economist, His mission was not 
to introduce reform in legislative measures, not to right 
abuses by force, but to teach men truth and love, which 
would of its very nature make them free. Isaiah prophesied 
of Him : "He shall not strive nor cry, neither shall any man 
hear His voice in the street; He shall bring forth judg- 



346 RIGHT AND RICHES 

ment unto truth, He shall not fail nor be discouraged till 
He have set judgment in the earth." 

Most economic writing is too much discouraged and dis- 
couraging, but it cannot be otherwise when it looks only to 
human legislation for relief. 

Jesus did not decry the production and use of wealth. 
He warned against its hoarding and its worship. How 
many find "when they have much goods laid up for many 
years" that they have no so^d or sense of enjoyment of them. 
'Xay not up for yourselves treasures upon earth where moth 
and rust doth corrupt, and where thieves break through and 
steal." But lay up treasures in heaven — harmony, righteous- 
ness, right thinking, understanding, the satisfaction of good 
done. 

The old Scotchman who, after he had become a bank- 
rupt, was reproached with having been too liberal with his 
benefactions replied: "Ah, that is the only part of my for- 
tune I have left; I can't lose that." 

Waste must not be confused with liberality. "The vile 
person shall no more be called liberal, nor the churl said to 
be bountiful. The liberal deviseth liberal things, and by lib- 
eral things shall he stand." It is common to hear the giving 
of public wealth embraced in franchises, to rich corporations, 
endorsed by the same persons who urge the poor to be sat- 
isfied with their meagre supply. 

Wealth is wealth as light is light only when it is diffused. 
Nature abhors the storing up of wealth. How few things 
can we heap up without they decay. "Take therefore no 
thought for the rporrow." He said to pray "give us this day 
our daily bread ;" in other words, replace anxiety with love, 
for "perfect love casteth out fear." "Cease to do evil, learn 
to do well; seek judgment; relieve the oppressed * * * if 
ye be willing and obedient, ye shall eat the good of the land." 
Righteousness tends to the flow of prosperity, just as a 
straight channel tends to a rapid flow of water. Is it not 



GOVERNMENT AND OPPORTUNITY 347 

every day becoming better recognized that confidence is the 
basis of prosperity and that fear annihilates wealth? Love 
is no less a vital part of wealth, but it is not so much com- 
mercially recognized. But confidence should rest on under- 
standing of the truth. 

'T even I am He that comforteth you; who art thou 
that thou shouldst he afraid of a man that shall die =^ * * 
and forgettest the Lord thy maker that hath stretched forth 
the heavens and laid the foundations of the earth ; and hast 
feared every day because of the fury of the oppressor as if 
he were ready to destroy, and where is the fury of the op- 
pressorf 

Do present laws oppress? What are you doing to pro- 
mote freedom? Scripture teaches that the "law of liberty" 
is ''to love our neighbor." It is not alone the rich who are 
oppressive; poor men are often brutal to their families. 
"The Kingdom of Heaven is within you." You do not have 
to be a millionaire to be an oppressor nor to be a philan- 
thropist. "True the heart grows rich in giving." Try it. 
Give everyone a smile, do everyone a kindness. It is retro- 
active. Are you a poor man without proper employment? 
Get your heart full of love and good will. People like to hire 
such persons. See how much kindness and love you can 
put into the work you have to do. 

Drummond points to the great difference between trying 
to be "pleasing" and trying to "give pleasure." Trying t® 
he pleasing is eye service. Trying to give pleasure by our 
work is what gets a better job. If you are a painter or 
plasterer, see that your material is free from "dope." Are 
3^ou a carpenter, don't be too saving of nails. Try being a 
law unto yourself. It is unfortunately true that some labor 
agitators are dishonest workmen, and lax about paying their 
debts. Don't cowardly submit to wrong where you can 
remedy it, for if you do you become particeps criminis. 



348 RIGHT AND RICHES 

The accepted economic precepts make the oppressor en- 
tirely too formidable and invincible. He is only a shadow, 
has only the power we concede; turn on the light and he 
vanishes. The poor are oppressed by their own errors and 
fears. Do not sit down and hate some rich person. "He 
that hateth his brother is a murderer." Do not think you 
are bound down by an unfortunate system, or the lack of 
certain laws. ''Fret not thyself because of evildoers, neither 
be thou envious against the workers of iniquity." Whatever 
laws you think good, work for their enactment, but know 
that their enactment, and especially their effect depends 
upon the state of thought in the community. You do not 
need to wait for prohibition to stop drinking; just quit con- 
ceding any power to the drink habit. Yet he who is not 
willing to give up drink for the good of humanity is ex- 
tremely selfish. 'Tf meat cause my brother to offend I will 
eat no meat while the world stands," says Paul. 

Do not seek trouble ; seek happiness in truth. Thinkers 
everywhere are coming to recognize that most of our 
troubles are only what we make of them. Poverty, disease 
and sin are only as strong as we concede them to be. None 
of them have any real legal existence. "The nature of evil 
does not exist," says Epictetus. "The truth will make you 
free." Warning men of the awful power of drink did not 
promote temperance. Strenuous precautions against dis- 
ease do not promote health, neither does the fear of hard 
times and evil industrial conditions promote prosperity. Do 
you believe the 23rd Psalm? "The Lord is my shepherd, 
I shall not want." "Be not overcome with evil, but over- 
come evil with good." — Romans 12 :21. If God be for us 
who can be against us?" "Trust in the Lord and do good; 
so shalt thou dwell in the land, and verily thou shall be fed." 
—Psalm 37. 

Said Jeremy Taylor: "Prosperities can only be enjoyed 
by them who fear not at all to lose them." Predatory wealth 



GOVERNMENT AND OPPORTUNITY 349 

that takes the shares of labor, consumer and society is only 
the concession we make of it. Evil of whatever nature has 
only the power we concede to it. Many persons suffer in- 
tensely from imaginary slights and insults. Epictetus says 
no man can insult you if you do not take offense. *Xet all 
those who put their trust in Thee rejoice; let them ever 
shout for joy because thou defendest them; let them also 
that love thy name be joyful in Thee. For Thou Lord wilt 
bless the righteous; with favor shalt Thou compass him as 
with a shield." 

"The lips of the righteous feed many; but fools die for 
want of wisdom." If there were no brave hearts contrglled 
by kindness and love ; if every creditor insisted on his pound 
of flesh, not caring how much blood were shed in taking it, 
what a terrible thing a panic would be. But there is lots 
of love among men and it is impelling them to the study of 
right and it will reform laws, but meantime let us be a law 
unto ourselves. The community with least greed and fear 
recovers most quickly from panic. 

How many fail from having a heart poisoned from hate ! 
How many fail from being pessimistic, having no faith in 
their fellow men nor in progressive measures. Faith at 
Seattle moved mountains and cast them into the sea. How 
few have the high ideal He prescribed : "Whosoever will be 
chief among you let him be your servant." Service is His 
ideal of business. How many strive, worry and struggle to 
get property wherewith to exercise authority. You cannot 
have a God of greed in your business and a God of love in 
your religious life. 

While the way of Jesus provides, for those wonder- 
provoking demonstrations in the provision of subsistence, as 
instances by Elijah and the handful of "meal that wasted 
not" in Jesus getting the coin from the fish's mouth to pay 
His taxes, and in the feeding of the five thousand, yet 
God's blessings mostly come through the usual channels. 



350 RIGHT AND RICHES 

For when the devil suggested that He command that the 
stones be made bread, He repHed, ''Man shall not live by 
bread alone." The principles of His economics apply in the 
ordinary relations of life. He taught faith, love, diligence, 
honesty, understanding, patience, purity, temperance, kind- 
ness; to have the; thought right. Where are such sure ele- 
ments of success? Hov^ many fail through intemperance, 
ignorance, dishonesty, impatience! But if we know the 
truth no power can oppress us. 

A noble example of the power of love and truth is fur- 
nished in Roger Williams, who, by inspiring through his 
integrity the confidence and friendship of the Indians, was 
alone able to live right amongst them during all the bloody 
wars without fear or harm. No other Colonist could depend 
upon their word or treaties; no other person had any re- 
source for safety from their tomahawks. What a power in 
the business world does such integrity, such bounteous love 
give a man ! A power for good but not for evil ! 

Is anything more obvious than the work of Christians 
in the commerce of America? Dishonesty and confusion 
there is, but what grand results have been achieved by the 
noble service of our Christian merchants, manufacturers, in- 
ventors and men in many lines. Christian principles are the 
only sure rules of success. But negative goodness simply is 
not sufficient; righteousness is what guarantees prosperity. 
"We must seek first the Kingdom of God and His right- 
eousness." 

What does ''righteousness" mean? Webster defines 
"righteous" as right knowledge or understanding, as being 
derived from "right wis" or right wise. He defines righteous- 
ness : "Comprehending holy principles and affections of the 
heart, conformity of life to divine law." 

In the light of these definitions it would seem that Jesus 
was simply stating an absolute scientific principle when He 
affirmed that "all these things" should be available to him 



GOVERNMENT AND OPPORTUNITY 351 

who sought His righteousness. For righteousness, as thus 
comprehending one's being in conformity with divine law, 
implies a consonance with or at-one-ment with God and man. 

Can there be other than a plenteous supply of wealth — 
well being — happiness or satisfaction from such attainment? 

Nor need we wait for results until the ultimate perfec- 
tion of this righteous attainment is reached. We may claim 
results according to the degree of our progress. In Matthew 
25 we have Jesus' words : "Come ye blessed of my Father, 
inherit the kingdom prepared for you from the foundation 
of the world * * * inasmuch as ye have done it (loved and 
ministered) unto one of the least of these my brethren." 

The Bible contains the directions for attaining this right- 
eousness by which all good is added unto us, and all error 
excluded. "But how shall we understand without a teacher?" 
Let us thank God that we have a teacher; that in our day 
there is a woman with such clear perception of the spiritual 
meaning of Jesus' teachings that she has given us a key to 
their wonderful treasures. The little book "SCIENCE 
AND HEALTH, WITH KEY TO THE SCRIPTURES," 
by Mary Baker G. Eddy, enables us, more than any 
book I have ever read, to so comprehend the scriptural 
Truth, that it will indeed free us from every enslaving op- 
pressor to which we have been conceding authority, and to 
cast out not only the error of poverty but disease and sin. 
The author is grateful for the slight understanding of the 
Truth which he has received through study of the scriptures 
in the light of the teachings of this wonderful Book, and 
refers the reader to the same key to the treasures of the 
scriptures for a full solution of the problem of life. There- 
by he may learn that righteousness comes by understanding, 
and understanding comes only by demonstration. "He that 
is faithful over a few things is made ruler over many 
things." 



352 RIGHT AND RICHES 

We hear much of the unholiness of wealth ; such quota- 
tions as "Money is the root of all evil," etc., being cited. 
Jesus surely did teach the inadequacy of property as a source 
of satisfaction ; yet He as certainly taught that in our pres- 
ent stage of being "Your Father knoweth that ye have need 
of such things." Jesus as surely taught the overcoming of 
disease and poverty as that of sin. He fed the multitudes ; 
He directed the casting of the net for a large catch ; He sent 
them forth to heal without purse or scrip; His parting 
words were "Preach the gospel, heal the sick, and nothing 
shall by any means hurt you." Thousands are learning that 
these truths are for our present realization. 

The greatest lack of humanity to-day, and what is most 
discouraging, is the l?xk of an ultimate purpose in life ; lack 
of a desire which, when supplied, will truly give satisfac- 
tion. Material wealth or physical well-being is not the ulti- 
mate of Jesus' teachings, but spiritual perfection through 
putting off sensuality and fear, through becoming a new 
man "renewed in knowledge after the image of Him that 
created him." Only as man progresses toward this rightful 
estate of perfection can he attain any true sense of brother- 
hood, or sonship ; only by this means is social progress pos- 
sible. 

The ultimate of such social progress is the complete ex- 
tinction of property as constituted of the power to hinder use, 
for when we realize the fulfillment of the commandment to 
love our neighbor as ourself we shall not seek to hinder but 
to bless him to the fullest extent. 

And as men attain this knowledge they will become 
faithful citizens in urging all social reforms. He taught us 
to look right about us for our work. 

We approve kindergarten work, yet we do not expect 
every child who cuts paper to be a paper-box maker. 

A boy who is enthusiastic in his interest in electricity or 
chemistry will apply his small knowledge to the demonstra- 



GOVERNMENT AND OPPORTUNITY 353 

tions possible in his mother's kitchen. The child must learn 
in the range of thought and action within reach, and advance 
to what is higher. As we become men we must put away 
childish things, but we must put our knowledge to the proof 
regarding "earthly things," or how shall we believe what He 
tells us "of Heavenly things?" 

If we are really following the teachings of the Master, 
"we look for new heavens and a new earth wherein dwelleth 
righteousness/' and we may be sure we are making small 
advancement if we have no interest in civic reforms which 
tend to uplift and bless humanity, as well as every other 
means to promote harmony both in ourselves and our en- 
vironment. 

Our business is likely to be our best and widest field for 
demonstrating God's kingdom, for it is likely to bring us 
most into contact with humanity. Paul writes : "I beseech 
you that ye walk worthy of the vocation wherein ye are 
called, with all lowliness and meekness, forbearing one an- 
other in love, till we all come in the unity of the faith, and 
of the knowledge of the Son of God, unto a perfect man, 
unto the measure of the stature of the fullness of Christ." 

St. John says: "Beloved, now are we the sons of God, 
and it doth not yet appear what we shall be; but we know 
that when He shall appear (or be revealed to us) we shall 
be like him, for we shall see Him as He is, and every one 
that hath this hope in him purifieth himself even as He is 
pure." 

Only by attaining purity and righteousness; only by 
gaining the understanding of God as Life, Truth and Love, 
and Man as God's image, can we love our neighbor as our- 
self. "If we love one another God dwelleth in us and His 
love is perfected in us." 

As we become "renewed in knowledge after the image 
of God," in which we were created, as related in the first 
chapter of Genesis, we shall have "dominion over all the 



354 RIGHT AND RICHES 

earth." We shall be less subject to poverty, disease, sin, 
death or any other of those enemies to whom we have been 
conceding authority as our masters. The ultimate of this 
Divine understanding is heaven, perfect satisfaction. The 
Psalmist says : "I shall be satisfied when I awake in His 
likeness." 



PUBLISHER'S NOTE. 



nrO THE READER:— If after having read 
Right and Riches you believe that its teachings 
tend to the good of mankind, we ask that you com- 
mend it to your friends. 

You and your friends, and their friends control 
the destinies of the Nation and the world. Hence 
you cannot measure the influence you may have. 

It takes but a word spoken, or written in a 

letter or on a post card, to tell your friends of a book 

you like, and it is often quite difficult to select the 

book worth the rime to read without some such 

friendly help. 

THE WILBUR PUBLISHING CO.. 
PASADENA. CALIFORNIA. 



